LEGISLATIVE UPDATE # 4                

FEBRUARY 2, 2006

1. HEARINGS ON IMPORTANT BANKING-RELATED LEGISLATION
2. STUDIES/REPORTS PRESENTED TO LEGISLATURE
3. PREDATORY LENDING STUDY FROM CEI

4. UPDATE ON DIRIGO HEALTH ISSUES

5. OTHER BANKING-RELATED LEGISLATION

 

1. HEARINGS ON IMPORTANT BANKING-RELATED LEGISLATION

 

LD 1761, AN ACT to Offer Financial Institutions an Option for Payment of the Maine Franchise Tax:  voted 11-1 Ought-to-Pass by the Taxation Committee and should be in Senate soon. 

 

LD 1782, AN ACT to Prevent Elder and Dependent Adult Financial Abuse:  was tabled by the Insurance and Financial Services Committee            pending a meeting of all stakeholders, which was held Tuesday January 31^st.  Lloyd LaFountain, Superintendent of the Bureau of Financial Institutions, chaired this meeting, and began with a statement that at least six of the IFS Committee members would vote to kill this LD. 

 

Each interested group discussed what they would like to see as a result of this legislation, but after lengthy discussion, it became clear that mandatory reporting would not be acceptable to the vast majority of those present.  The Department of Health and Human Services (DHHS) and The Office of Elder Services (TOES) both stated that they were not prepared for a mandatory reporting requirement, and that should it pass there would have to be a significant fiscal note (this statement was a significant departure from their public testimony at the January 24^th Public Hearing.)

 

The stakeholders agreed to recommend to the IFS Committee that Superintendent LaFountain would write a letter to all Maine financial institutions, asking for an increased and renewed commitment to train their employees to recognize and report suspected financial exploitation of the elderly, combined with updated materials from TOES to use for this training.    The Committee Legal Analyst will work with several interested parties to research whether Maine’s privacy laws need to be amended to make clear that a bank employee reporting suspected financial exploitation is protected from GLB privacy laws.

 

LD 1783, AN ACT to Amend the Maine Consumer Credit Code as it Relates to Finance Charges for Loans on Open-end Credit, was voted unanimously ought-to-pass, and this bill should move to the Senate early next week.

 

LD 1835, AN ACT to Protect Consumers from Credit Card and Debit Card Holds, continues to be studied by interested stakeholders, who were given an additional week before reporting back to the full Business Research and Economic Development Committee.  The focus of the bill now is to require some form of notice to consumers when a hold could be placed on their account.

 

2.  STUDIES/REPORTS PRESENTED TO THE LEGISLATURE:

 

Three separate Studies or Reports will be presented to the Legislature within the next two weeks:

The Bureau of Financial Institutions will discuss its Annual Report to the Legislature before the Insurance and Financial Services Committee Thursday, February 2, 2006;

 

Director Will Lund of the Office of Consumer Credit Regulation will present his Summer Study on “AN ACT to Protect Maine Citizens from Identity Theft”, Public Law 379 from 2005, which required his office to study if businesses beyond information brokers needed to be covered by the law.  This presentation also will occur Thursday, February 2, 2006 before the IFS Committee.  Director Lund does conclude that additional business needs to be covered, and also proposes a limited private cause of action, limiting recovery to “actual damages.”

 

Director Lund also completed a Summer Study regarding PayDay Lending, which he will present to the Business Research and Economic Development Committee on February 15^th.

 

3.  PREDATORY LENDING STUDY BY CEI

 

Bankers will be waiting for CEI’s Press Conference, scheduled for Monday February 13^th that will release their finding of predatory lending in Maine, and their proposed legislation that will “cure” some of the problems.  Several sections of the proposed legislation would be problematic for Maine’s banking industry (such as a provision requiring assignee liability, which is not an acceptable practice for the secondary market).  Bankers also must be prepared for questions from the public or media regarding predatory lending in Maine.  While the CEI Study states that “banks are not the problem”, we know that many consumers don’t distinguish among the variety of lenders in today’s marketplace.

The Maine Bankers Board will discuss this matter at their February Board meeting.

 

4.  UPDATE ON DIRIGO HEALTH ISSUES

 

There is important Dirigo legislation for consideration in 2006 – LD 1935, AN ACT to Protect Health Insurance Consumers, sponsored by Senator John Martin, which is the proposal that would prohibit insurance carriers from passing on the Dirigo Savings Offset Payments to their customers.  So far there is no companion legislation applying this prohibition to self-funded employers.  Anthem and the other carriers will vigorously oppose this, and for some carriers it may mean the difference between continuing in the Maine market or not!

 

Also, though the 2005 Rate Intervention case is still under appeal, Dirigo must begin their case for proving savings for 2006.  Unbelievably they take the position that the savings found by the Superintendent for 2004, totaling $43.7 million, carry over into 2005 – so that they begin from that point – any additional savings are just added to that amount!  Once again a number of employers will challenge and intervene in these proceedings.

 

5.  OTHER BANKING-RELATED LEGISLATION

 

LD 1817, AN ACT to Protect Access to Social Security Numbers, was amended at the Public Hearing so as to only impact Maine’s state university system and community colleges.  There was another amendment suggested by Commissioner Bruenn that any social security number held by a state agency not be subject to a freedom of information request.  MBA would not oppose the LDs as amended, but did testify in opposition to the bill as printed.

 

LD 1834, AN ACT to Accommodate Victims of Identity Theft, was reported out by the Business Research and Economic Development Committee ought-to-pass as amended. The amendment made clear that it did not impact legislation passed last Session and will not affect Maine’s banks.

 

LD   1837, AN ACT to Protect Retirement Funds was heard January 31^st in the Judiciary Committee.  There were no proponents, and MBA testified in opposition to the bill on the grounds that current law protects qualified retirement plans from bankruptcy, and non-qualified plans often shelter significant assets from high net worth taxpayers who would not need additional protections.