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LEGISLATIVE UPDATE
JANUARY 9, 2002
VOLUME 1
·
NEW LDs PRINTED & HEARINGS SCHEDULED TO DATE
·
CARRY OVER LEGISLATION FROM 2001
·
GOVERNOR’S BUDGET PROPOSAL
·
BANKERS DAY AT THE LEGISLATURE
·
LEGISLATIVE COMMITTEE MEETING DATES
NEW LDs (Legislative Documents) PRINTED &
HEARINGS SCHEDULED
The Second Regular Session of the 120th
Legislature convened Wednesday, January 2nd with many LDs waiting for
them. There were 300 – 400 carry
over proposals including studies, approximately 150 new bills authorized by the
Legislative Council for introduction this year, and dozens of proposals from the
various state agencies and Administration.
Even with these issues, the most important and time-consuming work for
this Session will be budget issues, with projections of a $250 million
shortfall.
New LDs affecting banking include:
LD 1835, AN ACT to Amend the Loan Broker Law, proposed
by Will Lund, Director of the Office of Consumer Credit Protection, which adds
regulatory oversight, bonding and registration requirements for certain loan
brokers. As originally drafted this
proposal would have reached bank employees closing or arranging for loans,
possibly requiring them to be licensed with Lund’s office. MBA led efforts to amend the LD,
limiting its impact to those not already regulated by existing laws and
regulatory agencies. Director Lund
accepted these arguments and amended the bill in a manner allowing MBA to
support the proposal. The Public
Hearing was held Friday Jan. 4th and the Work Session is Jan.
11th.
LD 1840, AN ACT to Amend the Uniform Commercial
Code, Article 9-A was proposed by the Secretary of State’s Office to reduce
certain filing fees when filing financing statements electronically. The electronic system has only been
operational since July 1, 2001 and will result in cost savings to its users and
lower costs to the State. However,
unfortunately this proposal to reduce fees may be a victim to the budget
shortfall since the Sec. Of State’s office is supported by the General Fund,
causing this proposal to have a negative fiscal note.
Also, when the 500 page Art. 9-A was passed in 2000, it
inadvertently brought back a fee for filing terminations. Since 1993, secured parties were only
charged one fee, up front with no termination fee. The Sec. of State had requested this in
order to reduce their workload and the tradeoff was that the fee for filing was
increased, reflecting and adding to it the former termination fee. The Judiciary Committee is very
receptive to grandfathering forms that had been filed without disclosures of
termination fees, but again this may fall victim to the fiscal note that would
be attached to it.
LD 1880, AN ACT to Reduce Identity Theft by Requiring
Truncated Credit Card Receipts was introduced by Senator Betty Lou Mitchell
with the support and assistance from Maine Bankers Association. The bill prohibits a person from
issuing to a cardholder a credit card receipt that contains more than the last 5
digits of the credit card or contains the expiration date. The language for this bill comes from
laws in California and Arizona that have been supported by major card issuer
groups. The Public Hearing will be
Friday January 25th before Banking & Insurance.
LD 1896, AN ACT to Simplify the Process by Which a
Financial Institution Transfers Motor Vehicle Title to a Lessee has been
introduced on behalf of Bangor Savings Bank and expands the ability of a
financial institution to sell a motor vehicle that it leased to the lessee of
the vehicle. This process today is
cumbersome, time-consuming and expensive both to the consumer and the bank. The Maine Auto Dealers with oppose this
bill. This bill will be heard by
the Transportation Committee in late January or early February.
LD 1959, AN ACT to Eliminate Dept of Professional and
Financial Regulation, Bureau of Insurance Travel Restrictions for Obtaining
Health Care has been introduced on behalf of the Maine Healthcare Purchasing
Cooperative. Maine Bankers
Association is a member of this Cooperative. The proposal removes a restriction found
in Bureau of Insurance Rules that prohibit incentives to use quality centers or
low cost alternative providers of health care.
The Public Hearing is Tuesday Jan. 15th.
LD 1972, AN ACT Regarding Trial Offers clarifies that
consumers who have agreed to purchase a good or service after the trial offer
ends, may cancel by mail, telephone or by 1-800 numbers. MBA supports this proposal as it adds an
additional option to the consumer to cancel, and for businesses to provide the
required notice. The Public Hearing
is 9:00 am before the Utilities Committee on Jan. 10th
LD 1987, AN ACT to Increase the Penalty for Appropriating
Another Person’s Social Security Number makes identity theft by means of
misuse of another’s social security number a Class C crime. MBA supports this proposal as a means
to prevent identity theft and toughen crimes against such theft. The Public Hearing is Friday January
18th at 9:30 a.m.
LD 1999, AN ACT to Clarify Recent Amendments to the Maine
Consumer Credit Code has been introduced by Will Lund at the request of
Maine Bankers Association and Maine Auto Dealers. The Maine Auto Dealers submitted
legislation that passed in 2001 that allows a dealer to defer all payments for
12 months, as long as no interest accrued during that period. The final version of this law
inadvertently prohibited all accrual of interest when a lender deferred payments
for more than 30 days, which is a common practice for real estate and other
loans. A Bulletin issued by the
Bureau of Banking and Office of Consumer Credit Regulation, as requested by the
Maine Bankers Association and Maine Auto Dealers, delayed the impact of this new
law until the Legislature clarifies that it does not intend to prohibit
deferrals for up to 90 days, which was as the law was until last year’s
change. This proposal has an
emergency pre-amble, and will be heard by Banking & Insurance Committee on
Friday Jan. 25th.
LD 2036, AN ACT to Increase Home Ownership, was introduced
on behalf of the Maine State Housing Authority to significantly increase
(from $1.65 billion to $2.15 billion) the amount of bonds that MSHA may issue
under the State’s Moral Obligation.
In year’s past MBA has supported their bond proposals, but since this is
a request for a large increase the Association’s Legislative Committee requested
additional information from the Housing Authority and Governor’s office about
the level of borrowing capacity.
The Hearing was Tuesday Jan. 9th before the Appropriation’s
Committee.
LD 2037, AN ACT to Repeal the Retroactive Effect of
Changes Made to the Subdivision Laws, is needed to repeal a sunset provision
that would authorize each municipality to have separate ability to define
subdivision. If this provision is
not repealed, title searches will have to include review of each town’s
subdivision laws, since they can be different from town to town in order to
certify title. This LD will be heard Wednesday Jan. 16th at 9:00
a.m.
CARRY OVER LEGISLATION FROM
2001
The following LDs deal with banking-related issues that
were carried over from 2001:
LD 1770, AN ACT Regarding Conversions of Nonprofit
Entities to For-Profit Entities is a bill resulting from two proposals, one
from the Attorney General and one from Speaker Saxl. When Blue Cross was bought by Anthem,
and again when MELMAC sold its student loan portfolio, the Attorney General and
the State in general found that it was ill-prepared to review such transactions
and lacked adequate law to assure the public’s interest had been met. Therefore in January of 2000 two
separate LDs were prepared, one dealing with the AG’s powers, and Saxl’s dealing
with health care entities converting to for profits.
These two LDs were worked by the Judiciary Committee and
merged into LD 1770, then were studied throughout the summer and into January,
2002. This proposal will be 50
pages long, grants sweeping authority to the Attorney General to review many
transactions by non-profit entities to for profits. Note that “conversion
transactions” reviewable by the AG include any transactions or sales of assets
having fair market value of more than $50,000 – it does NOT require the complete
sale of the non-profit entity.
LD 1770 impacts banks in many ways, including:
·
With the AG having
authority to review transactions, when a financial institution lends to a
non-profit the review by the AG could impact the collateral value of both the
non-profit entity and assets that it holds;
·
If your borrower is a
for profit buying an asset from a Non-profit, and if the AG determines that the
buyer did not give fair market value than the transaction is voidable and the
asset reverts back to the non–profit.
(In the original proposal, such transaction was VOID..not voidable – this
change was made at MBAs and others request);
·
Maine banks manage
literally billions of dollars held in trust for the benefit of non-profit
entities – these trusts and their beneficiaries will be impacted by this
law;
·
Bank officers or
employees who serve as directors of non-profits, as well as any non profit Board
Member, face additional liability risk for transactions determined by the AG as
not beneficial to the beneficiary or public purpose of the non-profit;
·
Members of the public,
who may be disgruntled by an action of a Non-profit, can ask for AG review of
the transaction – i.e. if the charity makes a grant and a member of the public
does not think that grant produces as much of a public benefit as an alternative
recipient, they can request AG review, and possibly delay the original grant
decision;
·
Costs of the review by
the AG will be born by the non-profit!
·
There will be
additional accounting and legal costs for all non-profits, as they must report
to the AG’s office when any transaction occurs and must choose initially the
form of their non-profit (are they a non-profit mutual benefit corporation, or
another form of non-profit?)
This is sweeping legislation that grants considerable
oversight powers to the Attorney General’s office. Some form of this LD will pass. After
months of work, it is much more narrow in scope than originally proposed and
more workable to the public, the state and the many non-profits impacted by this
new law.
LD 1573, AN ACT to Adopt the New Uniform Principal and
Income Act (NUPIA), strongly supported by the Trust Committee of the Maine
Bankers Association, was carried over to 2002. During a December Judiciary
Committee meeting, with the continued support from MBA, the Committee voted
unanimously Ought to Pass as Amended and this LD will go straight to the House
early in the Second Session. This
LD should pass and becomes effective January 1, 2003. 1573 will be covered as a subject for
the Annual Trust Conference on May 1, 2002.
Committee to Study Issues Concerning Changes to the
Traditional Uses of Maine Forest and Lands resulted from legislation that
proposed to alter leasholders’ rights in their leased land and alter how the
landowner leases that land. Many
Legislators have asked banks to become involved in the Study, as they have heard
from constituents about lack of loans available to leaseholders to improve their
lots. The Second Regular Session
has already extended the Study and appointed additional legislators to the
Study. There will be at least one,
maybe more, legislative proposals resulting from this Study. MBA will participate in the Study and
with the legislative issues resulting from it.
GOVERNOR’S PROPOSED BUDGET
You have all no doubt read about the anticipated $250 million
shortfall for the biennial budget, and steps that the state, the Governor and
the Legislature must take to balance this budget. {FYI – we are into the second quarter of
the first year of this two-year budget}
Many of the Governor’s proposals directly impact our industry,
including:
·
NOT Conforming to the
Federal Estate Tax reductions:
·
NOT Conforming to other
sections of the IRS Tax Code;
·
Delay tax indexing
until 2004
·
Implement a Real Estate
Transfer Tax on changes of interest
·
Eliminate NOL
Carrybacks
·
Medicaid cuts for DHS
(results in higher proportion of health care costs to be covered by the private
sector)
The Governor’s proposed budget is only a starting point for
Legislative discussions – but the business community will be fighting for status
quo throughout the Session. The Trust and Estate Tax issue may become a
significant issue if conformity were postponed indefinitely.
BANKERS DAY AT THE LEGISLATURE
TUESDAY, MARCH 19TH IS BANKERS DAY AT THE STATE
HOUSE! ONCE AGAIN BANKERS FROM AROUND THE STATE WILL CONVERGE AT THE STATE
CAPITAL – MBA’S GOAL IS TO HAVE ONE BANKER SHADOW EACH AND EVERY
LEGISLATOR!
PLEASE WATCH FOR ADDITIONAL COMMUNICATIONS! BUT SAVE THE
DATE!!
UPCOMING LEGISLATIVE COMMITTEE MEETING
DATES
February 7
March 7th
April 4th
