Keep your fingers crossed, but it appears that IBAT has been successful with 100% of its agenda!  After the veto period has ended, IBAT will publish a White Paper with all of the nitty gritty on the bills of interest to community bankers.  Meanwhile, here is a summary of our successes.

 

Finance Code Modernization.  Thanks to masterful footwork by Sen. Averitt, HB 955 made it through the senate at the last minute.  A few amendments were tacked on (and may not stay on), but the key provisions of this bill were not touched.  This bill will permit banks to make consumer loans at rates up to 18% without having to comply with the limitations on fees in chapter 342 of the Finance Code.  However, only third party fees are excluded from interest.  Commercial loan issues are cleaned up (like the Alamo Lumber case, late charges, etc.), and there is a possible constitutional amendment excluding large loans from usury.  Kudos to Rep. Solomons for staying the course!

 

Public Funds.  Banks will be able to use the CDARs (spread CD) program for public funds.  This eliminates the need for collateral but retains liquidity.  The glitch on school funds is fixed so that the 110% collateral ratio applies ONLY to declining balance securities.  Again, there will be cost savings for the depositary.  Reps. Flynn and Hopson and Sens. Duncan and Estes were our heroes here.

 

Garnishment.  This bill fixes the default problem with garnishments.  If a creditor fails to answer a garnishment, it will no longer be liable for the full judgment but will be able to prove up the amount owed to the judgment debtor.  The same bill permits borrowers to deposit loan proceeds with the lender without a usury question popping up.  Mucho thanks to Sen. Seliger for picking up this late term bill, which was introduced by Rep. Elkins!

 

ID Theft.  Several of the proposals either passed on their own or were added to bills that were moving.  Basically, IBAT worked out language in this area so that either there was an exemption for financial institutions OR compliance with federal requirements would constitute compliance.  A bill would make it an unfair debt collection practice to keep after a person after you learn the check was forged (and the alleged payor has filed a criminal complaint).  If a customer claims that a check was forged (and files a criminal complaint) and the customer requests that the item be returned as a forgery, the bank must return it as a forgery....even if the account is closed.  No more "refer to maker" notations in that scenario.

 

Defensive Game.  A lot of the time, your team was playing defense.  A bill that would have allowed activated Guards and Reservists to stop payments on their debts while they were activated did not make it to the floor.  IBAT and community banks are sensitive to the sacrifices that our servicemembers are making, but the federal Servicemembers Civil Relief Act provides appropriate relief (we believe).  As always, new priority liens (that would trump your position) were on the table.  For example, employee leasing companies felt that they should have a priority lien on ALL assets of the employer.  Utilizing our utmost in tact, we suggested that this was a bad idea.  We were also particularly engaged in explaining why it didn't make sense to tax wire transfers to foreign countries as a way to finance indigent health care.  (Besides, it wouldn't work.  The big companies with big wires would just shift their business to out of state banks and originate their wires elsewhere!)

 

Tax Reform.  Still percolating.  A fix to the Delaware loophole for limited partnerships with out of state general partner/corporations still appears likely.  However, we do not believe that the bank holding company "Delaware sandwich" will be touched.  We have preached to all who would listen that banks don't mind paying their fair share of taxes once, but they really don't like paying twice on the same capital and income!  We have "no double taxation" language ready and shared with certain conferees.

 

Counting down to Memorial Day!