IBA E-News 4-5-19
STATE GOVERNMENT RELATIONS
House Bill 1668 - Use of Social Security Numbers in Credit Files
Authors: Rep. Ryan Lauer, R-Columbus / Sen. Greg Walker, R-Columbus
Summary of legislation: The bill defines “Social Security number search request” (search request) as a request made by a consumer to a consumer reporting agency to conduct a search of all files maintained by the consumer reporting agency to determine if the consumer’s Social Security number is associated with one or more consumer credit files not associated with the consumer. It requires each consumer reporting agency that compiles and maintains files on consumers on a nationwide basis to, not later than January 1, 2020, develop and maintain procedures to do the following: (1) Enable a consumer to submit a search request to the consumer reporting agency through one or more secure means.(2) Enable the consumer reporting agency, upon receiving a search request, to: (A) verify that the Social Security number supplied by the consumer in connection with the request belongs to the consumer; (B) conduct a search of all files maintained by the consumer reporting agency to determine if the consumer’s Social Security number is associated with one or more files not associated with the consumer; (C) include with the information provided to the consumer in connection with the consumer’s request a statement as to whether the consumer’s Social Security number is associated with one or more files other than the consumer’s file and, if so, the number of such files; and (D) take all lawful and reasonable actions to remove the consumer’s verified Social Security number from all other files not associated with the consumer. The bill provides that a consumer who receives notice from a consumer reporting agency that the results of a search performed for the consumer indicate that the consumer’s Social Security number is associated with one or more files not associated with the consumer: (1) may take any action authorized by law to further investigate the use of the consumer’s Social Security number; (2) has all applicable rights and remedies available to the consumer under the federal Fair Credit Reporting Act; and (3) has all applicable rights and remedies available to the consumer under federal or state consumer protection laws and state criminal laws.
The bill also provides that a consumer reporting agency may not impose a fee for any service provided in connection with a consumer’s search request if certain circumstances apply. It allows a consumer reporting agency to charge a reasonable fee, not exceeding $5 in total, for services provided in connection with a consumer’s search request, if none of the circumstances apply with respect to the consumer’s request.
Latest action: The bill was heard in the Senate Insurance and Financial Institutions Committee on April 3 and held for future amendments.
Summary of legislation: The bill makes various changes to the statutes concerning: (1) first lien mortgage lenders; (2) persons licensed under the Uniform Consumer Credit Code (UCCC); (3) rental purchase agreements; (4) debt management companies; (5) banks; (6) credit unions; (7) pawnbrokers; and (8) money transmitters. Repeals a provision in the statute concerning rental purchase agreements that specifies that any up-front payment made by the lessee: (1) must be treated as an initial rental payment; (2) is subject to the disclosure requirements under the statute; and (3) may be in a sum larger than a regular rental payment. Repeals a provision in the UCCC that provides that civil proceeding advance payment transactions (CPAP transactions) are subject to the UCCC. Strikes all provisions concerning CPAP transactions from the UCCC. Repeals provisions in the UCCC that define certain terms relating to CPAP transactions. Moves language in the UCCC applicable to the licensing of civil proceeding advance payment providers to the existing statute concerning civil proceeding advance payments and makes conforming amendments.
Latest action: The bill was heard and voted out of the Senate Insurance and Financial Institutions Committee on April 3. The bill is now eligible for second reading amendments in the Senate.
Summary of legislation: Regulation of hemp. Establishes the Indiana hemp advisory committee to provide advice to the office of the state seed commissioner regarding Indiana’s hemp laws. Changes references from “industrial hemp” to “hemp” and amends the definition of hemp to conform with the federal definition. Eliminates a limitation the provides that the state police department may not inspect a licensed hemp operation more than two times in a year without obtaining a search warrant. Allows the state seed 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 state seed commissioner may revoke the hemp license of a licensee that fails to cooperate with the state seed 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 state seed 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 state seed 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 state seed commissioner for the cost of testing conducted on the grower’s crop. Provides that the state seed 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 state seed commissioner, a person who violates hemp licensing requirements, terms, conditions, or rules shall reimburse the state seed commissioner for any costs incurred by the state seed commissioner for laboratory testing of material pertaining to the violation. Provides penalties for negligent violations of the hemp law. Allows the state seed commissioner to adopt emergency rules to comply with federal requirements. Establishes procedures by which the state seed 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 state seed commissioner may assess a civil penalty of not more than $2,500 for a violation. Provides that a person who: (1) violates a term, condition, or requirement of a hemp license; or (2) violates a rule adopted under the hemp law; commits a Class B misdemeanor and provides that the offense is a Class A misdemeanor if the person has a prior unrelated conviction for a drug offense. Provides that: (1) dealing in smokable hemp is a Class A misdemeanor; and (2) possession of smokable hemp is a Class C misdemeanor. Provides that civil penalties collected under the controlled substance laws shall be first used to reimburse the state seed commissioner for any expenses incurred by the state seed commissioner for laboratory testing of material pertaining to the violation, with the remainder deposited in the state general fund. Makes conforming changes.
Latest action: The bill was amended and voted out of the House Agriculture and Rural Development Committee on April 4. It now moves to second reading on the House floor.
FEDERAL GOVERNMENT RELATIONS
The federal financial institution regulatory agencies will host an interagency webinar on Thursday, April 11, at 2 p.m. EDT, covering the use of the weighted-average remaining maturity (WARM) method for estimating allowances for credit losses under CECL. The webinar will be held in conjunction with the Financial Accounting Standards Board, the Securities and Exchange Commission and the Conference of State Bank Supervisors.
FDIC Warns on ‘Gaps’ in Tech Vendor Contracts
The Federal Deposit Insurance Corp. issued a letter to all banks on Wednesday outlining gaps that some examiners had noted in banks’ contracts with technology vendors and reiterating regulatory requirements for these contracts.
“Examiners have noted in recent FDIC reports of examination that some financial institution contracts with technology service providers may not adequately define rights and responsibilities regarding business continuity and incident response, or provide sufficient detail to allow financial institutions to manage those processes and risks,” the agency indicated. Specifically, some contracts did not require the vendor to have a business continuity plan, establish recovery standards, define remedies if a vendor misses a standard, detail a vendor’s post-incident notification duties or define key terms related to business continuity and incident response.
The letter reminded banks about the interagency guidelines setting information security standards, which were issued under the Gramm-Leach-Bliley Act and the notification requirements under Section 7 of the Bank Service Company Act. The FDIC also indicated that long-term contracts and those that automatically renew “may be at higher risk” for coverage gaps and that banks should assess and manage risks around those gaps.
CFPB’s Kraninger Named FFIEC Chairman
Consumer Financial Protection Bureau Director Kathy Kraninger on Monday began a two-year term as chairman of the Federal Financial Institutions Examination Council. National Credit Union Administration Chairman Mark McWatters will serve as vice chairman of the group, which includes all federal financial regulators and a representative of the state bank regulators.
Meanwhile, Tennessee Commissioner of Financial Institutions Greg Gonzales was reappointed to a two-year term on the State Liaison Committee. He serves as chairman of the five-member SLC, which represents the perspectives of state banking agencies on FFIEC. John Ducrest, commissioner of the Louisiana Office of Financial Institutions, and Steve Pleger, senior deputy commissioner of the Georgia Department of Banking and Finance, were also named to two-year terms on the SLC.
Agencies Update CECL FAQs as FASB Rejects Alternative Plan
Federal regulators updated their frequently asked questions on the Current Expected Credit Loss accounting standard, while the Financial Accounting Standards Board rejected a regional bank proposal to reform the standard.
The regulatory FAQs focus on applying CECL for estimating credit-loss allowances and related supervisory expectations and regulatory reporting guidance. As reported by The Wall Street Journal, the FASB board’s vote against the regional bank plan to amend CECL by counting only 12 months of expected losses against net income means it will likely be implemented on schedule without further changes.
Rep. Hollingsworth Calls for Diverse Business Models in Banking
In an address this week at the American Bankers Association’s Emerging Leaders Forum, Rep. Trey Hollingsworth (R-Ind.) made a plea for tailored regulation that would allow banks of all sizes and models to compete on a level playing field.
“We’ve got to fix the regulatory environment to better tailor regulations for large institutions and small institutions,” he said, pointing to the widespread loss of small banks over the past 10 years and the need for faster innovation. He added that the current regulatory regime has resulted in very similar balance sheets across the industry, and that a diversity of business models would enhance the safety and soundness of the sector.
Hollingsworth also stressed the importance of bankers sharing their stories with lawmakers in order to dispel the myth of “banks versus customers.” He said, “Make sure when you walk out of the room, legislators know you can’t have capitalism without capital.”