Friday's News

October 4, 2019

Legislative bodies may have been in adjournment or recess this week, but that did not stop the action on several banking-related fronts, from debt collection to LIBOR. On a positive note, credit unions operating on military bases may learn what it’s like to pay their fair share.

State Legislative Developments

• Although the Legislature remains on a break until January, S.6751 (Salazar)/A.8603 (Kim), relating to relief from predatory debt collectors, was introduced late last week. This bill would authorize a debtor to bring an action or counterclaim against a principal creditor who employs deceptive acts or practices in collecting a debt from the debtor.

• California enacted a new law that allows local government entities in the state to charter public banks. Under the law, which takes effect in January, up to two public bank charters per year—subject to an initial cap of 10—could be issued. Any public bank would be required to obtain FDIC insurance to obtain a charter. The California Bankers Association, as well as the state’s local tax collectors and county treasurers, who argued that depositing local public funds into a newly created bank—as envisioned by the law—would “violate state statute and the public trust.”

State Regulatory Developments

• NYBA submitted a comment letter to the Department of Financial Services commenting on proposed rule 3 NYCRR Part 409, regarding student loan servicers, pursuant to language included in this year’s enacted State Budget. In the letter, NYBA requested an extension of time for enforcement as well as additional guidance and clarification. A copy of the letter is available here.

Federal Legislative Developments

• Congress is in recess until after the Columbus Day holiday, but Senate Banking Committee Chairman Mike Crapo (R-ID) told reporters he hopes to have a Senate vote on a cannabis banking bill by the end of the year.
• NYBA wrote to members of the New York Congressional delegation working to reconcile a defense appropriations bill to support a provision of the bill that requires the Department of Defense to treat equally banks and credit unions operating on military bases. In addition to their federal tax exemption, credit unions operate on bases free-of-charge, while banks are pay rent and related expenses. Members on the conference committee are: Senator Gillibrand and U.S. Reps. Delgado, Katko, Engel, Meeks, Nadler, Rose, Stefanik, Tonko, and Velazquez.
• Just before leaving for recess last week, the Senate approved a continuing subsidy of the Small Business Administration’s 7(a) loan program for the 2020 fiscal year. Without the approval, the program would have shut down on October 1.

Federal Regulatory Developments

• The federal banking agencies finalized a rule governing management interlocks, which would allow a director or other management officials at small banks to work at more than one institution, as long as both banks have less than $10 billion in assets.
• The FDIC announced that John Vogel has been named Deputy Director of Operations and Chief of Staff in the Division of Risk Management and Supervision. Mr. Vogel previously served as Regional Director for New York. Succeeding Mr. Vogel in that position will be Frank Hughes, who was serving as Deputy Regional Director in New York.
• The OCC published its supervisory priorities for the new fiscal year, and cybersecurity topped the list.

Legal Developments

• On Monday, a federal judge dismissed a lawsuit filed by New York, Connecticut, Maryland, and New Jersey against the IRS and Treasury challenging the constitutionality of the state and local tax (SALT) deduction cap. U.S. District Judge J. Paul Oetken ruled that the Tax Cuts and Job’s Act $10,000 SALT deduction cap was not unconstitutionally coercive, finding that the states had not plausibly alleged that the cap meaningfully constrains the states’ decision-making process. The four states had asserted that the SALT cap exceeded Congress’s taxing power and forced the states to choose between higher taxes and their current levels of public investments.

Resources

• The FDIC is holding a series of Listening Sessions across the country as part of its “Trust Through Transparency” campaign. The New York Region session will be held on Wednesday, November 13 from 8:30 am to 12:30 pm at FDIC, Empire State Building, 350 Fifth Avenue, New York, New York 10118. Click here for registration.
• The Federal Housing Finance Agency has released guidance regarding the transition from LIBOR. After March 31, 2020, the Federal Home Loan Banks will no longer be able to enter into new LIBOR-referenced instruments with maturities beyond December 31, 2021. The Federal Home Loan Bank of New York has also published helpful information.

Questions?
Contact Mike Smith at (212) 297-1699 or msmith@nyba.com, or Clare Cusack at (212) 297-1664 or ccusack@nyba.com.
To unsubscribe, email dmccausland@nyba.com.

Questions?