IBA E-News 4-12-19
STATE GOVERNMENT RELATIONS
Only two weeks remain in the 2019 legislative session. Bills that failed to pass out of committee this week are considered dead for the year. In the coming two weeks, the legislature will have to work quickly to get bills passed and sent to Gov. Holcomb in order to meet the constitutional deadline of this year’s session, set for April 29. However, the Legislature will attempt to adjourn by April 24, according to House Speaker Brian Bosma.
The IBA GR Team will continue to pay close attention to proceedings during the remainder of session. Following are a few bills of note:
Authors: Rep. Woody Burton, R-Whiteland / Sen. Andy Zay, R-Huntington
Summary of legislation: Makes the following changes to the Uniform Consumer Credit Code (UCCC): (1) Amends the provisions authorizing specified additional charges for consumer loans to permit a lender to contract for and receive a transaction fee for a revolving loan account that may not exceed the greater of: (A) 2% of the amount of the transaction; or (B) $10. (Current law authorizes the lender to charge a transaction fee in the lesser of these two amounts.) (2) Replaces the authorized $5 delinquency charge (subject to indexing by the department of financial institutions) for consumer credit sales and consumer loans with a nonindexed delinquency charge of: (A) $5, if installments are due every 14 days or less; (B) $25, if installments are due every 15 days or more; or (C) $25, in the case of a single installment due at least 30 days after the sale or loan is made. (3) Specifies that a creditor may not charge or collect a delinquency charge on a payment that: (A) is paid within 10 days after its scheduled due date; and (B) is otherwise a full payment of the payment due for the applicable installment period; if the only delinquency with respect to a consumer credit sale or a consumer loan is attributable to a delinquency charge for an earlier installment. Urges the legislative council to assign to an interim study committee, for study during the 2019 interim, the topic of revisions to the UCCC. Sets forth issues for consideration by an interim study committee assigned this topic.
Latest action: The bill passed the Senate Insurance and Financial Institutions Committee on Wednesday by a vote of 9-0 and is now eligible for second reading amendments.
Authors: Sen. Randy Head R-Logansport / Rep. Greg Steuerwald, R-Danville
Summary of legislation: Defines “designated representative,” “judicial proceeding” and “nonjudicial matter” for purposes of the trust code. Authorizes the establishment of legacy trusts. Prescribes the procedures for establishing a legacy trust and requirements for claims under a legacy trust. Provides that a court shall exercise jurisdiction over a legacy trust or a qualified disposition and adjudicate a case or controversy regarding the legacy trust, if the case or controversy is within the subject matter of the court. Adopts the uniform directed trust act, which allows for the terms of a trust to grant a person other than a trustee power over some aspect of the trust’s administration. Provides that current law regarding the duties and liabilities of a trustee of a trust under the control of a third person applies to directions given to a trustee before July 1, 2019, by a person who has power under the terms of the trust to direct the trustee. Allows for the use of quiet trusts. Provides that an interested person may enter into a binding nonjudicial settlement agreement with respect to trust matters. Provides for nonjudicial account settlements.
Latest action: The bill passed the House on Tuesday by a vote of 73-23 and is now eligible for a concurrence vote in the Senate.
Authors: Sen. Andy Zay, R-Huntington / Rep. Matt Lehman, R-Berne
Summary of legislation: Makes the following changes to the Uniform Consumer Credit Code (UCCC): (1) Repeals a provision specifying a reference base index for use by the department of financial institutions (department) in adjusting specified dollar amounts designated as subject to change throughout the UCCC. (2) Replaces: (A) the tiered credit service charge authorized for consumer credit sales; and (B) the 25% loan finance charge authorized for consumer loans; with a flat charge of 36% per year on the unpaid balances. (3) Increases the: (A) minimum credit service charge for consumer credit sales; and (B) minimum loan finance charge for consumer loans; from $30 (subject to indexing) to $50 (not subject to indexing). (4) Eliminates indexing of the authorized $5 delinquency charge for consumer credit sales and consumer loans. (5) Provides that a seller in a consumer credit sale may take a security interest in goods sold if the debt secured is at least $1,500 (not subject to indexing), versus $300 (subject to indexing) in current law. (6) Changes the authorized nonrefundable prepaid finance charge for consumer loans not secured by an interest in land from $50 to $100. (7) Repeals: (A) the definition of “supervised loan”; and (B) the provision establishing the authorized loan finance charge for supervised loans. Makes conforming amendments throughout the UCCC and the Indiana Code. (8) Provides that for a consumer loan: (A) with a loan finance charge greater than 25%; and (B) in which the principal is $4,000 or less (not subject to indexing); a lender may not contract for an interest in land as security. (Current law prohibits a lender from contracting for an interest in land as security if the loan principal is $4,000 or less (subject to indexing) without regard to the loan’s finance charge.) (9) Provides that consumer loans having a loan finance charge exceeding 25% and in which the principal is $4,000 or less are payable over a period of not more than: (A) 37 months if the principal is more than $1,100 (versus $300, subject to indexing, in current law) but not more than $4,000; or (B) 25 months if the principal is $1,100 (versus $300, subject to indexing, in current law) or less. (Current law specifies these maximum loan terms for loans with a principal amount of $4,000 or less (subject to indexing) without regard to the loan’s finance charge.) (10) Provides that a creditor in a consumer loan transaction may not contract for or receive a separate charge for property casualty insurance unless the amount financed exclusive of charges for the insurance is at least $1,000 (versus $300, subject to indexing, in current law), and the value of the property is at least $1,000 (versus $300, subject to indexing, in current law). Authorizes a lender that is licensed by the department to make small loans under the UCCC to make unsecured consumer installment loans under the same license. Defines an “unsecured consumer installment loan” as a loan: (1) with a principal amount that is: (A) more than $605 and not more than $1,500; and (B) payable in three or more substantially equal periodic payments; and (2) in which the lender holds one or more checks of the borrower for a specific period, or is authorized to debit the borrower’s account on one or more occasions for a specific period, before the lender deposits the check or debits the account. Requires that the loan term for an unsecured consumer installment loan be at least six months but not more than nine months. Provides for the following with respect to unsecured consumer installment loans: (1) An authorized finance charge and monthly maintenance fee. (2) An annual fee assessed on lenders of $1,000 per license and $1,000 per Indiana branch location (after the first location), for financial education programs. Prohibits: (1) the renewal of an unsecured consumer installment loan; and (2) a borrower from having: (A) a small loan and an unsecured consumer installment loan; or (B) more than one unsecured consumer installment loan; outstanding at the same time. Establishes requirements for the licensure and conduct of persons issuing small dollar loans. Defines “small dollar loan” as a loan with a maximum loan amount of $3,000 and a term of: (1) at least 180 days; and (2) not more than 36 months. Provides that with respect to a small dollar loan, a lender may contract for a loan finance charge of not more than 72%. Provides for an annual fee assessed on lenders of $1,000 per license and $1,000 per Indiana branch location (after the first location), for financial education programs. Establishes the consumer financial education fund (fund) for the purpose of paying expenses incurred by the department relating to consumer financial education. Provides that the annual fees required to be paid by: (1) lenders licensed to make small dollar loans and unsecured consumer installment loans; and (2) lenders licensed to make small dollar loans; shall be deposited in the fund. Specifies that a “rate,” for purposes of the loansharking statute, includes a nonrefundable prepaid finance charge. Replaces language conforming the loan rate for the criminal loansharking statute to the maximum loan finance charge for consumer loans under the UCCC, with language specifying that a loan is considered loansharking if it is made at a rate greater than 72% per year on the unpaid balance of the principal.
Latest action: The bill passed the House Financial Institutions Committee on Tuesday by a vote of 7-3 and is now eligible for second reading amendments.
Authors: Sen. Randy Head, R-Logansport / Rep. Sean Eberhart, R-Shelbyville
Summary of legislation: Establishes the Indiana hemp advisory committee to provide advice to the office of the state seed commissioner regarding Indiana’s hemp laws. Prohibits the state seed commissioner (commissioner) from regulating a hemp commodity or product. Changes references from “industrial hemp” to “hemp” and amends the definition of hemp to conform with the federal definition. Allows for aerial inspection of hemp crops. Removes the limitation on the number of inspections that the state police department may conduct on a licensed hemp operation. Allows the commissioner to perform a criminal background check of an applicant for a hemp license or agricultural hemp seed production license. Establishes a uniform expiration date for hemp licenses and agricultural hemp seed production licenses. Requires a person who sells agricultural hemp to have a seed distribution permit. Provides that: (1) the commissioner may revoke the hemp license of a licensee who fails to cooperate with the commissioner, the state police, a federal law enforcement agency, or a local law enforcement agency in an inspection of the licensee’s crop; and (2) the failure to cooperate constitutes probable cause for the commissioner, state police, federal law enforcement agency, or local law enforcement agency to search the premises of the licensee’s hemp operation. Provides that if the state police department, a federal law enforcement agency, or a local law enforcement agency cooperates with the commissioner in the detention, seizure, or embargo of a hemp crop, the state police department, federal law enforcement agency, or local law enforcement agency is immune from civil liability for the detention, seizure, or embargo. Provides that a hemp grower shall reimburse the commissioner for the cost of testing conducted on the grower’s crop. Allows the commissioner to order a hemp crop that is detained, seized, or embargoed for noncompliance to be destroyed by the owner. Subject to federal law, allows the commissioner to divert for processing a hemp crop that is detained, seized, or embargoed. Establishes requirements for a licensed handler to distribute clones and other non-seed propagative material. Provides that the commissioner may enter into agreements with laboratories selected by the Indiana state police department to perform testing of hemp samples. Requires any civil penalties collected under the hemp law to be transferred to the Indiana state department of agriculture and used for hemp marketing and research purposes. Provides that in addition to payment of any civil penalty imposed by the commissioner, a person who violates certain requirements shall reimburse the commissioner for any costs incurred by the commissioner for laboratory testing of material pertaining to the violation. Allows negligent violations of the hemp law to be corrected without a penalty. Allows the commissioner to adopt emergency rules to comply with federal requirements. Establishes procedures by which the commissioner shall apply to the United States Department of Agriculture for approval of Indiana’s hemp regulation. Requires a person who sells hemp to: (1) be licensed in Indiana and in the jurisdiction in which the hemp is grown; and (2) provide certain information to the buyer. Provides that a person who knowingly or intentionally violates: (1) a term, condition, or requirement of a hemp license; or (2) a rule adopted under the hemp law; is subject to a civil penalty and possible license revocation. Provides that growing or handling hemp or selling hemp seed without a license is a Class A infraction. Prohibits a local government unit from adopting or enforcing an ordinance that restricts or regulates the growth, production, or processing of hemp. Provides that the cannabinoid percent present in low THC hemp extract be certified. Adds testing requirements to low THC hemp extract that may be distributed in Indiana. Provides that civil penalties collected under the controlled substance laws shall be first used to reimburse the commissioner for any expenses incurred by the commissioner for laboratory testing of material pertaining to the violation, with the remainder deposited in the state general fund. Makes conforming changes. Removes expired provisions.
Latest action: The bill is awaiting a vote on third reading in the House.
FEDERAL GOVERNMENT RELATIONS
Senate Confirms Calabria for FHFA
The Senate has confirmed Mark Calabria for director of the Federal Housing Finance Agency with a 52-44 vote. Calabria, who will take over for Acting Director Joseph Otting, will play a key role in the debate over reforming Fannie Mae and Freddie Mac.
Calabria has said he would follow the lead of Congress in reforming the housing finance system.
Bipartisan Bill Aims to Address Marijuana Conundrum
Sens. Cory Gardner (R-Colo.) and Elizabeth Warren (D-Mass.) and Reps. Earl Blumenauer (D-Ore.) and David Joyce (R-Ohio) have introduced the States Act, a bipartisan bill that aims to resolve the conflict between state and federal laws on marijuana. The bill would amend the Controlled Substances Act so that it no longer applies to persons acting in compliance with state or tribal laws on cannabis, and the proceeds of any compliant transaction would not be deemed unlawful under anti-money laundering statutes or other federal laws.
For the States Act to apply, state and tribal laws must continue to include basic protections. The bill keeps in place Controlled Substances Act bans on: endangering human life while manufacturing a controlled substance; employing minors in marijuana operations; distributing cannabis at transportation safety facilities such as rest areas and truck stops; and distributing or selling marijuana to people under age 21 except for medicinal purposes.
Trump Recommends Herman Cain for Fed
President Donald Trump has recommended Herman Cain to serve on the Federal Reserve Board. Cain is a businessman and former Kansas City Fed chairman who ran for president in 2012. If formally nominated, Cain would follow the nomination of the Heritage Foundation’s Stephen Moore to fill the two open positions on the Fed’s board of governors.
Key Senators Back Expanded Basel III Exemption
Two key members of Congress have called on regulators to update a proposed rule to exempt more community banks from the Basel III capital rules. Senate Banking Committee Chairman Mike Crapo (R-Idaho) and committee member Jerry Moran (R-Kan.) urged regulators to lower their proposed 9% community bank leverage ratio to 8%.
Reducing the CBLR to 8%, as authorized by Congress in the S. 2155 regulatory relief law, would exempt another 600 highly capitalized banks from the risk-based capital rules.
President Donald Trump has nominated Michelle “Miki” Bowman for a full term as a member of the Federal Reserve Board. If confirmed by the Senate, Bowman’s nomination for a full 14-year term would begin Feb. 1, 2020.