LEGISLATIVE UPDATE # 5 FEBRUARY 22, 2006
I. UPDATES ON IMPORTANT BANKING LEGISLATION
II. STATUS ON CEI PREDATORY LENDING STUDY
III. UPDATE ON DIRIGO HEALTH LEGISLATION
IV. BANKERS' DAY SET FOR APRIL 6TH, 2006!
I. UPDATES ON IMPORTANT BANKING LEGISLATION
SENATE ACTION: LD 1761, AN ACT to Offer Financial Institutions an Option for Payment of the Maine Franchise Tax, was passed unanimously twice in the Senate, and moves to the House on February 28th.
LD 1783, AN ACT to Amend the Maine Consumer Credit Code as it Relates to Finance Chargers for Loans On Open-end Credit, also passed unanimously twice in the Senate and will be on the House Calendar Tuesday February 28th.
COMMITTEE ACTION: LD 1782, AN ACT to Prevent Elder and Dependent Adult Financial Abuse, will turn into a Resolve asking for greater training effort on behalf of financial professionals working with The Office of Elder Services, which will provide updated training materials for the industry. Superintendent LaFountain will make sure that this subject, and the suggested training remains a priority issue for Maine's banks. The Resolve requires Supt. LaFountain to write a letter to each Maine bank about the need for training. The Insurance and Financial Services Committee accepted this Report and its recommendations from the stakeholders meeting that met with Supt. LaFountain.
LD 1810, AN ACT Concerning Criminal Record Reports, was heard before the Criminal Justice Committee. After two Work Sessions the Committee voted unanimously Ought-not-to-pass. Maine Bankers Association opposed one proposed amendment offered by the Maine Civil Liberties Union that would have impacted use of credit reports by employers.
LD 1817, AN ACT to Protect Access to Social Security Numbers was amended so as to only apply to the State of Maine's University system and Community Colleges. There was also an Amendment proposed from Commissioner Christine Bruenn that requires state departments and agencies to protect confidentiality of social security numbers when asked for a freedom of information request. As amended, Maine Bankers Association did not oppose the bill though monitored the Judiciary Committee's Work Sessions on this LD. The Judiciary Committee will review the final language with the proposed amendments next week.
LD 1834, AN ACT to Accommodate Victims of Identity Theft, unanimously passed the Business Research and Economic Development Committee, and as amended will not impact the banking industry as it makes only minor changes to legislation passed last Session.
LD 1835, AN ACT to Protect Consumers from Credit Card and Debit Card Holds, was worked by the Legislature's Business Research and Economic Development Committee, with a directive to interested parties to craft a notice provision that would pass as a Resolve. It is significantly changed from the original, more onerous proposal. The interested parties are meeting this week while the Legislature is on recess and the BRED Committee will review their report upon its return next week.
LD 1837, AN ACT to Protect Retirement Funds, which was opposed by the Maine Bankers Association, was reported out of the Judiciary Unanimous Ought Not to Pass.
LD 1870, et al, AN ACT to Clarify Laws Governing Eminent Domain, will have public hearings next week before the Judiciary Committee. Maine Bankers Association will monitor the progress on these bills, as there are several, being heard together, all impacting the state's ability to take private property through the eminent domain process in response to last years U.S. Supreme Court decision.
LD 1981, Resolve, Regarding Legislative Review of Chapter 335, Significant Wildlife Habitat, a major substantive rule proposed by the Department of Environmental Protection, brought back to the Natural Resources Committee this proposed Rule, concerning Vernal Pools. The DEP Rule would prohibit building, unless with a DEP permit, in a 250 ft zone (plus a 75 foot buffer area) around a vernal pool. Maine Bankers Association was asked if this Rule would impact a landowner's ability to receive a loan on their property. We testified Neither For Nor Against, but said that Yes, there would be impact on lending here, and adverse economic impact on the property owner by means of lower property values. Numerous environmental groups supported this proposed rule, while developers and realtors opposed it. There will be a Committee Work Session next week, and this matter could become quite controversial - several Maine Newspapers ran stories about it.
LD 2017, AN ACT to Amend the Notice of Risk to Personal Data Act, will have its Public Hearing on March 7th, 2006. This legislation resulted from the Data Breach bill that passed last year, which required a summer study by Will Lund, Director of the Office of Consumer Credit Regulation. This Study recommended legislation broadening the impact of last year's bill to all businesses, and also establishes written standards for all state agencies and departments. (Last year's legislation only impacted data brokers.) This LD includes one Section that would create a private cause of action, which most businesses as well as our industry will oppose.
II. PREDATORY LENDING STUDY RELEASED BY CEI
On Monday, February 13th, CEI along with the Center for Responsible Lending, the Attorney General's office and other groups held a Press Conference to present the CEI Study on Predatory Lending in Maine. Along with the Study were several proposed policy recommendations and the supporters also have prepared legislation for 2006. Many of the proposals suggested within the Study would cause problems for Maine banks making mortgage loans. The Study and the Press Conference made clear that banks and credit unions were NOT the cause of these problems, but if the legislation they propose were to pass there would be many ramifications for the way we currently provide mortgage loans.
Maine Bankers Association's position is that first, Banks are not the cause of this problem, and that point must be clearly made! Second, there is no need for legislation in 2006, as many of their proposals go far beyond what is needed to correct the problem - Maine already has a predatory lending statute.
III. DIRIGO HEALTH UPDATE
LD 1935, AN ACT to Protect Health Insurance Consumers had its Public Hearing last week, and will be worked by the Insurance and Financial Services Committee on March 2nd. This legislation would prohibit insurance carriers from passing on the Dirigo Savings Offset Payments to their customers, and has been the most controversial Dirigo-related issue this year. Should this LD pass several carriers have threatened to leave the state. Dirigo supporters have also filed legislation that would allow the formation of a non-profit mutual insurance company to underwrite and sell the Dirigo Choice insurance product.
While the Legislation is pending, two Court appeals are working their way through the judicial process - both challenge the savings calculation by Dirigo and allowed by the Superintendent of Insurance. These decisions should be made in the coming months.
At the same time, the Dirigo Board has begun its 2006 Hearings to determine the savings resulting from Dirigo for this year so as to approve the savings offset payment for 2007! Currently, the savings offset payment is 2.4 % effective upon a plan's renewal.
IV. BANKERS' DAY SET FOR APRIL 6TH
Each bank should plan to participate in the annual Bankers' Day at the State House, which this year will be held Thursday April 6th. At first we were concerned that the Legislature might adjourn prior to this date, but we are now assured they will remain in Session at least through the week of April 10th. So please join us for this Annual event.
