DECEMBER 10, 1999
I. LEGISLATIVE COUNCIL ACCEPTS MBA’s 2000 LEGISLATIVE AGENDA
The Maine Bankers Association proposed three bills for consideration in the Second Regular Session of the 119th Legislature. This Session will convene January 5, 2000 and run through mid-April. More than 500 bills will be scheduled for hearings in the upcoming Session.
MBA’s three bills are:
(1) AN ACT to Amend Maine’s Banking Code Regarding Interlocking Directors;
(2) AN ACT to Amend Maine’s Probate Code, and
(3) AN ACT to Create Employment Opportunities by Clarifying Maine’s Tax Laws Regarding Mutual Fund Companies.
The Legislative Council, consisting of the ten members of Legislative Leadership, voted to accept each of these proposals for consideration during the Second Session. The Interlocking Directors bill proposes to grant the Superintendent of Banking waiver authority on the prohibition against interlocking directors. This proposal is needed after the passage of Maine’s Universal Charter law so that directors or officers of limited purpose banks may have the opportunity to serve on a full service bank Board. Federal banking regulators have approved even stronger rules for national banks, and this proposal brings Maine law closer to the recent federal rule changes.
The Probate Code proposal clarifies a non-uniform provision of the Maine Probate Code so those bank trust officers who manage assets within a trust are allowed to charge fees based on the size of the assets in the trust. There are conflicting Probate Code provisions between the section that deals with estates and the section that deals with trusts, and this change eliminates a cross-reference from the trust section to the estate section. This will return Maine law to the Uniform Probate Code version. The Trust and Estate section of the Maine Bar Association will support this proposal.
Finally, the proposal dealing with the taxation over mutual funds will clarify Maine law so that a mutual fund company that moved to Maine would not be taxed on its entire fund assets, only on the portion that are invested by Mainers. This clarification is like laws passed in Rhode Island and Connecticut so that those states could attract mutual funds companies to locate there.
II. COMMISSION ON STATE CEILING ON TAX-EXEMPT BONDS
MBA First Vice Chairman Peter Blyberg has represented the banking industry as a member of the Commission Studying the State Ceiling on Tax Exempt Bonds. The Commission has met several times, and plans at least two more meetings prior to its January 15th deadline to issue a report to the Business and Economic Development Committee of the Legislature.
The Commission has narrowed its focus. Among the issues being discussed are:
1) What is the availability of student loan money if the state did not allocate private activity bond money to student lending?
2) Is it legal for the state to offer private lenders access to private activity bond money?
3) What process should Maine adopt to determine how Maine allocates private activity bond money?
4) What disclosure requirements should be required for student lenders who use the private activity bond money and offer discount or incentives?
5) Should student lenders accessing Maine’s private activity bond money be required to use FAME ‘s service as a guarantee authority?
These are significant issues needing considerable time. Former banking Superintendent Don DeMatteis has been retained as senior staff to assist the Commission in completing its assignments. The Commission’s next meeting is on Dec. 20th from 12 noon to 4 p.m.
III. MAINE REVENUE SERVICES CONDUCTING TAX SURVEY
Maine banks have been sent a survey by the Maine Revenue Services concerning income earned from insurance and securities affiliates. MRS is conducting this survey as a result of a direct request from the Taxation Committee of the Maine Legislature. During the 1999 Session, the Taxation Committee reviewed a proposal from the Independent Insurance Agents that would tax financial institution income earned from sale of insurance and/or securities at the corporate income tax rate and not at the bank franchise tax rate. This legislation was defeated, but the Taxation Committee wanted more information about the revenue impact to the state if there were a lot of insurance agencies and security brokerage agencies owned by banks, thereby shifting income from the higher corporate rate to the bank franchise tax rate.
Members are encouraged to complete and return the survey to the Maine Revenue Services. We believe that Maine Revenue Services is not seeking to re-introduce new legislation, but only wants to respond to the request of the Taxation Committee. At this time, there are relatively few Maine financial institutions that will have significant income from subsidiary operations selling insurance or securities.
IV. GOVERNOR’S RETIREMENT INDUSTRY ADVISORY COUNCIL ISSUES REPORT AND RECOMMENDATIONS
The Retirement Industry Advisory Council completed its study of Maine’s retirement industry and has submitted a report, “A Golden Opportunity II, How Maine Can Enhance The Retirement Industry,” to the Governor for his consideration. It is expected that a number of recommendations from the Study will be offered as legislation in 2000.
Mark Walker, Vice President and Counsel for Maine Bankers Association served as Chair of the Sub-Committee that reviewed Maine’s tax policy. This Sub-committee included Sam Ladd, Executive Vice President of Maine Bank & Trust, Dick Curran, President of Acadia Trust, other trust bankers and tax professionals, and representatives from two public retiree groups. Two recommendations will impact Maine’s tax policy so as to retain or attract retirees into the state. These recommendations are to offer a one-time tax credit or exemption for the sale of business, and to exclude a certain amount of public pension income ($6,000 was one figure used in the Report) from the personal income tax. This latter proposal will help attract military retirees and make Maine more competitive with the many states that have offered similar public pension benefits.
V. LEGISLATION FROM OTHER SOURCES
A) UCC ARTICLE 9 STUDY COMMITTEE – Maine will join a large number of states that consider adoption of new Article 9 of the Uniform Commercial Code. This 500- page proposal has been studied over the summer by both a Sec. Of State Task Force, including representation from MBA, and from the business section of the Maine Bar Association. There are significant improvements to Article 9 regarding filing security interests, but will require a great amount of compliance education following the expected passage of the proposal. Maine Bankers Association will co-host a program helping banks and other businesses comply with the many changes in the Spring of 2000.
B) Department of Professional and Financial Regulation – will have two titles submitted on their behalf that impact banks. The first is from the Bureau of Banking and is titled AN ACT to Realign Capital Requirements for Specialty Bank Charters. This proposal will address capital requirements for the bank charters created by the Universal Charter legislation passed two years ago. The capital requirements are not consistent for the different specialty charters and need to be amended.
The second proposal is somewhat of an omnibus bill that would make any changes to Maine’s banking code that result from S.900, from the UCC Article 9 study mentioned above, or from other sources that impact Maine banking laws and need immediate action.
C) We have also identified a number of bills carried over from the last Session that could impact Maine banks. These include the following titles:
AN ACT to Amend Consumer Protection Laws with respect to Internet Service;
AN ACT to Amend the Real Estate Brokerage Laws Regarding Property Disclosures;
AN ACT to Establish the State Revolving Loan Fund for Small Business Initiatives (would have either the DECD or FAME administer this fund);
AN ACT to Clarify the Admissibility of Electronic Records and Signatures – Maine needs to adopt digitalized signature laws to promote e-commerce;
AN ACT to Establish OSHA Standards for Operators of VDTs - MBA and other businesses opposed this LD, which was carried over pending new Federal rules;
AN ACT to Stimulate Job Creation and Investment in Maine by Amending the Income Tax Apportionment Formula – would adopt a single sales factor for Maine;
AN ACT to Encourage Equity Equivalent Loans or Investments in Community Development Financial Institutions – proposed by four economic development agencies in Maine so that these types of loans would gain preferential tax treatment; and
AN ACT to Adopt the Uniform Electronics Transfers Act (UETA).
VI. Assistant Attorney General Gives New Life to AARP Proposal on Telemarketing Fraud. On March 22, 1999 the Committee on Utilities and Energy wrote to the Attorney General asking him to comment on whether or not additional state laws were necessary to combat telemarketing fraud. At that time, the Committee was considering legislation proposed by the AARP, LD 1402, “An Act to Create the Telemarketing Registration and Fraud Prevention Act.” This legislation was based on a national campaign that the AARP has undertaken to try to get states to add further regulation to the telemarketing industry. On March 31, 1999, the Attorney General responded saying that he had asked Jim McKenna, an Assistant Attorney General to work on a response. On April 26th, not having heard from the Attorney General’s office, the House replaced LD 1402 with a resolve calling on the Attorney General to conduct a study of existing state laws and rules and federal laws and regulations that regulate telemarketing and to report his finding and recommendations by December 31, 1999 to the Joint Standing Committee on Utilities and Energy. The resolve went on to authorize the Committee to put together new legislation based on the Attorney General’s report.
The Assistant Attorney General has contacted the Maine Bankers Association and others who either supported or opposed LD 1402. In early December, he met with the AARP, which has submitted amended legislation for consideration. On December 8th, he held a meeting for representatives of those groups, including the MBA, Maine Chamber, Bell Atlantic, Direct Marketing Association, Maine Independent Telephone Companies Association, AT&T, and MCI, who are concerned about the need for further legislation. Our group was very dismayed that the Assistant Attorney General had held a separate meeting with the AARP and had not included us in the discussion. This Assistant Attorney General told us up front that he had the highest regard for the AARP and their interest in consumer protections. He did admit, however, that there are a number of laws, both state and federal, that specifically address telemarketing fraud and some of the issues raised by the AARP.
The Assistant Attorney General, Jim McKenna, will submit his report to the Attorney General by the end of the month. The Attorney General, Andrew Ketterer, has said publicly that elderly consumer education is the solution to elderly telemarketing fraud. The Attorney General has hired staff to work on telemarketing fraud and has conducted numerous education programs. If the Attorney General does support additional state laws, he has not expressed it to date. We expect the Attorney General’s response in about three weeks.
VII. American Bankers Association Issues Key Vote Congressional Scores For 106th
Congress, 1st Session, 1999.
Members of the House were rated on five key House votes.
1. Opposition to the Hyde-Conyers Amendment to H.R. 833 which would have undermined the core needs-based test for Chapter 7 bankruptcy eligibility – ABA Opposed the amendment.
2. Vote on final passage of H.R. 833, the Bankruptcy Reform Act of 1999- ABA Supported.
3. Vote in favor of the rule controlling floor debate on H.R. 10, the Financial Services Act of 1999 – ABA Supported.
4. Vote on final passage of H.R. 10, the Financial Services Act of 1999 – ABA Supported
5. Vote on agreeing to the conference report on S. 900, the Gramm-Leach-Bliley Act (financial modernization)- ABA Supported.
YES means the Congressman voted in support of ABA’s position.
#1 Hyde-Conyers #2 Bankruptcy Bill #3 HR 10 Vote #4 HR 10 Final #5 S.900
ALLEN NO NO NO YES YES
BALDACCI NO NO NO YES YES
In the Senate, three key votes were identified.
1. Vote on Johnson/Thomas/Kerry Amendment to S. 900, to fully close the unitary thrift loophole by prohibiting commercial firms from buying existing thrifts. ABA supported the Johnson/Thomas/Kerry amendment.
2. Vote on final passage of S. 900, the Final Modernization Act. ABA supported final passage.
3. Vote on agreeing to the House/Senate conference report on S. 900, the Gramm-Leach-Bliley Act. ABA supported.
YES means the Senator voted in support of the ABA’s position.
#1 Johnson/Thomas #2 S. 900 Final Passage #3 S. 900 Conference Report
Kerry Amendment
SNOWE YES YES YES
COLLINS YES YES YES
DECEMBER 10, 1999
I. LEGISLATIVE COUNCIL ACCEPTS MBA’s 2000 LEGISLATIVE AGENDA
The Maine Bankers Association proposed three bills for consideration in the Second Regular Session of the 119th Legislature. This Session will convene January 5, 2000 and run through mid-April. More than 500 bills will be scheduled for hearings in the upcoming Session.
MBA’s three bills are:
(1) AN ACT to Amend Maine’s Banking Code Regarding Interlocking Directors;
(2) AN ACT to Amend Maine’s Probate Code, and
(3) AN ACT to Create Employment Opportunities by Clarifying Maine’s Tax Laws Regarding Mutual Fund Companies.
The Legislative Council, consisting of the ten members of Legislative Leadership, voted to accept each of these proposals for consideration during the Second Session. The Interlocking Directors bill proposes to grant the Superintendent of Banking waiver authority on the prohibition against interlocking directors. This proposal is needed after the passage of Maine’s Universal Charter law so that directors or officers of limited purpose banks may have the opportunity to serve on a full service bank Board. Federal banking regulators have approved even stronger rules for national banks, and this proposal brings Maine law closer to the recent federal rule changes.
The Probate Code proposal clarifies a non-uniform provision of the Maine Probate Code so those bank trust officers who manage assets within a trust are allowed to charge fees based on the size of the assets in the trust. There are conflicting Probate Code provisions between the section that deals with estates and the section that deals with trusts, and this change eliminates a cross-reference from the trust section to the estate section. This will return Maine law to the Uniform Probate Code version. The Trust and Estate section of the Maine Bar Association will support this proposal.
Finally, the proposal dealing with the taxation over mutual funds will clarify Maine law so that a mutual fund company that moved to Maine would not be taxed on its entire fund assets, only on the portion that are invested by Mainers. This clarification is like laws passed in Rhode Island and Connecticut so that those states could attract mutual funds companies to locate there.
II. COMMISSION ON STATE CEILING ON TAX-EXEMPT BONDS
MBA First Vice Chairman Peter Blyberg has represented the banking industry as a member of the Commission Studying the State Ceiling on Tax Exempt Bonds. The Commission has met several times, and plans at least two more meetings prior to its January 15th deadline to issue a report to the Business and Economic Development Committee of the Legislature.
The Commission has narrowed its focus. Among the issues being discussed are:
1) What is the availability of student loan money if the state did not allocate private activity bond money to student lending?
2) Is it legal for the state to offer private lenders access to private activity bond money?
3) What process should Maine adopt to determine how Maine allocates private activity bond money?
4) What disclosure requirements should be required for student lenders who use the private activity bond money and offer discount or incentives?
5) Should student lenders accessing Maine’s private activity bond money be required to use FAME ‘s service as a guarantee authority?
These are significant issues needing considerable time. Former banking Superintendent Don DeMatteis has been retained as senior staff to assist the Commission in completing its assignments. The Commission’s next meeting is on Dec. 20th from 12 noon to 4 p.m.
III. MAINE REVENUE SERVICES CONDUCTING TAX SURVEY
Maine banks have been sent a survey by the Maine Revenue Services concerning income earned from insurance and securities affiliates. MRS is conducting this survey as a result of a direct request from the Taxation Committee of the Maine Legislature. During the 1999 Session, the Taxation Committee reviewed a proposal from the Independent Insurance Agents that would tax financial institution income earned from sale of insurance and/or securities at the corporate income tax rate and not at the bank franchise tax rate. This legislation was defeated, but the Taxation Committee wanted more information about the revenue impact to the state if there were a lot of insurance agencies and security brokerage agencies owned by banks, thereby shifting income from the higher corporate rate to the bank franchise tax rate.
Members are encouraged to complete and return the survey to the Maine Revenue Services. We believe that Maine Revenue Services is not seeking to re-introduce new legislation, but only wants to respond to the request of the Taxation Committee. At this time, there are relatively few Maine financial institutions that will have significant income from subsidiary operations selling insurance or securities.
IV. GOVERNOR’S RETIREMENT INDUSTRY ADVISORY COUNCIL ISSUES REPORT AND RECOMMENDATIONS
The Retirement Industry Advisory Council completed its study of Maine’s retirement industry and has submitted a report, “A Golden Opportunity II, How Maine Can Enhance The Retirement Industry,” to the Governor for his consideration. It is expected that a number of recommendations from the Study will be offered as legislation in 2000.
Mark Walker, Vice President and Counsel for Maine Bankers Association served as Chair of the Sub-Committee that reviewed Maine’s tax policy. This Sub-committee included Sam Ladd, Executive Vice President of Maine Bank & Trust, Dick Curran, President of Acadia Trust, other trust bankers and tax professionals, and representatives from two public retiree groups. Two recommendations will impact Maine’s tax policy so as to retain or attract retirees into the state. These recommendations are to offer a one-time tax credit or exemption for the sale of business, and to exclude a certain amount of public pension income ($6,000 was one figure used in the Report) from the personal income tax. This latter proposal will help attract military retirees and make Maine more competitive with the many states that have offered similar public pension benefits.
V. LEGISLATION FROM OTHER SOURCES
A) UCC ARTICLE 9 STUDY COMMITTEE – Maine will join a large number of states that consider adoption of new Article 9 of the Uniform Commercial Code. This 500- page proposal has been studied over the summer by both a Sec. Of State Task Force, including representation from MBA, and from the business section of the Maine Bar Association. There are significant improvements to Article 9 regarding filing security interests, but will require a great amount of compliance education following the expected passage of the proposal. Maine Bankers Association will co-host a program helping banks and other businesses comply with the many changes in the Spring of 2000.
B) Department of Professional and Financial Regulation – will have two titles submitted on their behalf that impact banks. The first is from the Bureau of Banking and is titled AN ACT to Realign Capital Requirements for Specialty Bank Charters. This proposal will address capital requirements for the bank charters created by the Universal Charter legislation passed two years ago. The capital requirements are not consistent for the different specialty charters and need to be amended.
The second proposal is somewhat of an omnibus bill that would make any changes to Maine’s banking code that result from S.900, from the UCC Article 9 study mentioned above, or from other sources that impact Maine banking laws and need immediate action.
C) We have also identified a number of bills carried over from the last Session that could impact Maine banks. These include the following titles:
AN ACT to Amend Consumer Protection Laws with respect to Internet Service;
AN ACT to Amend the Real Estate Brokerage Laws Regarding Property Disclosures;
AN ACT to Establish the State Revolving Loan Fund for Small Business Initiatives (would have either the DECD or FAME administer this fund);
AN ACT to Clarify the Admissibility of Electronic Records and Signatures – Maine needs to adopt digitalized signature laws to promote e-commerce;
AN ACT to Establish OSHA Standards for Operators of VDTs - MBA and other businesses opposed this LD, which was carried over pending new Federal rules;
AN ACT to Stimulate Job Creation and Investment in Maine by Amending the Income Tax Apportionment Formula – would adopt a single sales factor for Maine;
AN ACT to Encourage Equity Equivalent Loans or Investments in Community Development Financial Institutions – proposed by four economic development agencies in Maine so that these types of loans would gain preferential tax treatment; and
AN ACT to Adopt the Uniform Electronics Transfers Act (UETA).
VI. Assistant Attorney General Gives New Life to AARP Proposal on Telemarketing Fraud. On March 22, 1999 the Committee on Utilities and Energy wrote to the Attorney General asking him to comment on whether or not additional state laws were necessary to combat telemarketing fraud. At that time, the Committee was considering legislation proposed by the AARP, LD 1402, “An Act to Create the Telemarketing Registration and Fraud Prevention Act.” This legislation was based on a national campaign that the AARP has undertaken to try to get states to add further regulation to the telemarketing industry. On March 31, 1999, the Attorney General responded saying that he had asked Jim McKenna, an Assistant Attorney General to work on a response. On April 26th, not having heard from the Attorney General’s office, the House replaced LD 1402 with a resolve calling on the Attorney General to conduct a study of existing state laws and rules and federal laws and regulations that regulate telemarketing and to report his finding and recommendations by December 31, 1999 to the Joint Standing Committee on Utilities and Energy. The resolve went on to authorize the Committee to put together new legislation based on the Attorney General’s report.
The Assistant Attorney General has contacted the Maine Bankers Association and others who either supported or opposed LD 1402. In early December, he met with the AARP, which has submitted amended legislation for consideration. On December 8th, he held a meeting for representatives of those groups, including the MBA, Maine Chamber, Bell Atlantic, Direct Marketing Association, Maine Independent Telephone Companies Association, AT&T, and MCI, who are concerned about the need for further legislation. Our group was very dismayed that the Assistant Attorney General had held a separate meeting with the AARP and had not included us in the discussion. This Assistant Attorney General told us up front that he had the highest regard for the AARP and their interest in consumer protections. He did admit, however, that there are a number of laws, both state and federal, that specifically address telemarketing fraud and some of the issues raised by the AARP.
The Assistant Attorney General, Jim McKenna, will submit his report to the Attorney General by the end of the month. The Attorney General, Andrew Ketterer, has said publicly that elderly consumer education is the solution to elderly telemarketing fraud. The Attorney General has hired staff to work on telemarketing fraud and has conducted numerous education programs. If the Attorney General does support additional state laws, he has not expressed it to date. We expect the Attorney General’s response in about three weeks.
VII. American Bankers Association Issues Key Vote Congressional Scores For 106th
Congress, 1st Session, 1999.
Members of the House were rated on five key House votes.
1. Opposition to the Hyde-Conyers Amendment to H.R. 833 which would have undermined the core needs-based test for Chapter 7 bankruptcy eligibility – ABA Opposed the amendment.
2. Vote on final passage of H.R. 833, the Bankruptcy Reform Act of 1999- ABA Supported.
3. Vote in favor of the rule controlling floor debate on H.R. 10, the Financial Services Act of 1999 – ABA Supported.
4. Vote on final passage of H.R. 10, the Financial Services Act of 1999 – ABA Supported
5. Vote on agreeing to the conference report on S. 900, the Gramm-Leach-Bliley Act (financial modernization)- ABA Supported.
YES means the Congressman voted in support of ABA’s position.
#1 Hyde-Conyers #2 Bankruptcy Bill #3 HR 10 Vote #4 HR 10 Final #5 S.900
ALLEN NO NO NO YES YES
BALDACCI NO NO NO YES YES
In the Senate, three key votes were identified.
1. Vote on Johnson/Thomas/Kerry Amendment to S. 900, to fully close the unitary thrift loophole by prohibiting commercial firms from buying existing thrifts. ABA supported the Johnson/Thomas/Kerry amendment.
2. Vote on final passage of S. 900, the Final Modernization Act. ABA supported final passage.
3. Vote on agreeing to the House/Senate conference report on S. 900, the Gramm-Leach-Bliley Act. ABA supported.
YES means the Senator voted in support of the ABA’s position.
#1 Johnson/Thomas #2 S. 900 Final Passage #3 S. 900 Conference Report
Kerry Amendment
SNOWE YES YES YES
COLLINS YES YES YES
