IBA E-News 4-26-19
STATE GOVERNMENT RELATIONS
Wednesday night the Indiana General Assembly concluded its work for 2019. In doing so, it passed a two-year, $34 billion budget that increased public education money by $763 million more than originally proposed. The budget also includes extra money to: complete I-69 work; make improvements to U.S. 31; enhance broadband accessibility; allocate more resources to creating new trails throughout the state; and pay for additional flights from Indianapolis International Airport.
Additionally, the legislature passed an extensive gaming bill that would allow mobile gaming and one of the casinos located in Gary to be moved elsewhere. Funding to keep the Indiana Pacers in town for decades, along with funding for a potential soccer stadium for the Indy Eleven team, also passed.
The IBA played a critical role to ensure that multiple pieces of legislation that are vital to the financial services industry passed. Keep reading to learn more about these bills.
Authors: Rep. Woody Burton, R-Whiteland / Sen. Andy Zay, R-Huntington
Summary: 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. Specifies that an initial pleading related to a debt collection action filed by a debt buyer must include certain information. Makes a violation a deceptive act. 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 House by a vote of 68-23 on April 18 and now awaits the governor’s signature.
Authors: Rep. Jeff Ellington, R-Bloomington / Sen. Randy Head, R-Logansport
Summary: Adds to the list of telephone calls that are exempt from the “do not call” statute any telephone call made to a consumer by a caller that: (1) is: (A) a communications service provider that offers broadband internet service; or (B) a financial institution or a person licensed by the department of financial institutions to engage in first lien mortgage transactions or consumer credit transactions; and (2) has an established business relationship with the consumer. Requires the consumer protection division of the attorney general’s office (division) to notify Indiana residents of the following: (1) The prohibition under federal law against a person making any call using an: (A) automatic telephone dialing system; or (B) artificial or prerecorded voice; to any telephone number assigned to a mobile telecommunications service. (2) The prohibition under federal law against a person initiating any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior consent of the called party. (3) Information concerning the placement of a telephone number on the National Do Not Call Registry operated by the Federal Trade Commission. Allows the division to use the consumer protection division telephone solicitation fund (fund) to: (1) administer the statutes concerning: (A) the registration of telephone solicitors; and (B) the regulation of automatic dialing machines; and (2) reimburse county prosecutors for expenses incurred in extraditing violators of these and other state and federal statutes concerning telephone solicitations. (Current law provides that the fund may be used only to administer: (1) the state’s “do not call” statute; (2) the federal statute concerning restrictions on the use of telephone equipment; and (3) the state statute concerning misleading or inaccurate caller identification (caller ID statute).) Provides that certain civil penalties recovered by the attorney general for violations of the statutes concerning: (1) the registration of telephone solicitors; and (2) the regulation of automatic dialing machines; shall be deposited in the fund. Defines “executive” for purposes of the “do not call” statute, and provides that an executive of a person that violates the “do not call” statute commits a separate deceptive act actionable by the division. Provides that the attorney general can collect attorney fees and costs in a civil action for a violation of the caller ID statute. Amends the definition of “seller” for purposes of the statute requiring telephone solicitors to register with the division, so that the definition includes any person making a telephone solicitation. (Current law includes only persons making specified false representations in a telephone solicitation.) Provides that all sellers that make telephone solicitations must register with the division. (Under current law, registration is required only if the seller makes a solicitation involving consideration of more than $100 and less than $50,000.) Makes technical changes to the deceptive consumer sales act concerning violations of the caller ID statute. Allows the attorney general to collect a civil penalty of not more than: (1) $10,000 for the first violation; and (2) $25,000 for each subsequent violation; of the statute regulating automatic dialing machines. Urges the legislative council to assign to the interim study committee on corrections and criminal code the task of studying the following: (1) Whether existing criminal penalties for violations of specified telephone solicitation statutes should be increased. (2) The potential effects of increasing criminal penalties for violations of the statutes on: (A) the ability of the office of the attorney general to enforce compliance with the statutes; and (B) the state’s criminal justice system. (3) Reconciling state and federal laws concerning the Do Not Call registry and other telephone privacy laws.
Latest action: The bill passed the House on April 24 by a vote of 97-0 and now awaits the governor’s signature.
Authors: Sen. Randy Head, R-Logansport / Rep. Sean Eberhart, R-Shelbyville
Summary: Establishes the Indiana hemp advisory committee (committee) to provide advice to the office of the state seed commissioner (commissioner) regarding Indiana’s hemp laws. Sunsets the committee on July 1, 2021. Prohibits the commissioner from regulating a hemp product. Changes references from “industrial hemp” to “hemp” and amends the definition of hemp. Adds a definition of “hemp product.” 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 nonseed 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 hemp bud and hemp flower may be sold only to a licensed hemp processor and that the commissioner may assess a civil penalty of not more than $2,500 for a violation. 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 misdemeanor. 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 cannabidiol percent present in low THC hemp extract be certified. Provides a criminal penalty for dealing, manufacturing, financing, or possessing smokable hemp. Specifies that financial institutions, agencies, and instrumentalities of the state or the United States are not subject to certain crimes concerning financing the manufacture or distribution of smokable hemp. 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. Allows the court to defer judgment on a crime concerning smokable hemp and dismiss charges if certain conditions are met. Makes conforming changes. Removes expired provisions.
Latest action: The bill passed the Senate on April 24 by a vote of 39-9 and now awaits the governor’s signature.
FEDERAL GOVERNMENT RELATIONS
The U.S. Department of Agriculture has announced higher limits for the department’s direct and guaranteed farm loans under the 2018 Farm Bill. USDA raised guaranteed farm loan limits to $1.75 million, indexed to inflation.
The department also released an update on implementation of the Farm Bill following its enactment on Dec. 20, 2018. The update provides a title-by-title breakdown of implementation of the law, including policies on commodities, conservation, trade and credit.
HUD Issues New Requirements for Down-Payment Assistance
The U.S. Department of Housing and Urban Development has added documentation requirements for originating Federal Housing Administration-backed mortgages for borrowers that receive down-payment assistance. In a letter to FHA-approved mortgagees, HUD indicated lenders must document that all portions of a borrower’s minimum required investment are from permissible sources. The new guidance is designed to ensure government entities are acting within their governmental capacity to provide assistance, according to HUD.
FDIC, Treasury Heads Seek Reg Framework That Fosters Innovation
The Federal Deposit Insurance Corp. is working on a regulatory and supervisory framework that encourages banking innovation and partnerships with fintech companies, FDIC Chairman Jelena McWilliams said. Speaking at the FDIC’s "Fintech and the Future of Banking" conference in Arlington, Virginia, McWilliams said the risk-averse regulatory framework discourages banks from innovating, and that it needs reform.
Data was another major topic of discussion, with McWilliams proclaiming that “data is the new currency,” while emphasizing that banks must balance access to data with safety-and-soundness and consumer privacy concerns. She said the FDIC should make public as much of its data as possible and use data analysis to improve the agency, which is also launching an "FDIC Tech Lab" to promote innovative and transformative technologies in the financial services sector.
Additionally, McWilliams told reporters that as the FDIC considers industrial loan company applications for deposit insurance, it will require them to meet the same capital and profitability standards as regular banks.
Separately, Treasury Secretary Steven Mnuchin said consumers have a reasonable expectation of security and privacy of the data they provide to third parties. He said he leans toward allowing consumers to opt in – rather than opt out – of collecting and sharing their financial data.
Mnuchin also addressed regulatory balance, citing the need to ensure safety and soundness in the areas of cryptocurrency and anti-money laundering without undermining innovation. Additionally, he addressed housing finance reform, noting his goal of removing Fannie Mae and Freddie Mac from conservatorship as quickly as possible.