March 30, 2001
LEGISLATIVE UPDATE March 30, 2001 Volume 7
· Bankers Day Update & New Date for Legislative Committee Meeting
· Financial Services Privacy Legislation Brings Out Opponents
· Telemarketing Conformance Legislation Heads Back to Committee
· Session’s Most Significant Trust Legislation Scheduled for Hearing
· Maine Revenue Service Says Maine Loses over $1 million a year from Farm Credit’s Leased Property Sales Tax Exemption
· Federal Legislation Allowing Payment of Interest on Commercial Accounts Advances
BANKERS’ DAY AT THE LEGISLATURE COMING UP!
Over 140 bankers are expected to participant in Bankers’ Day at the Legislature on Tuesday, April 10, 2001. As part of this special day, 29 bankers will be recognized for their volunteer contributions that are making a difference for kids in their communities. These 29 bankers, our 2001 America’s Promise Volunteers, will be representing all of our combined industry employees, 10,000 strong, and the more than 500,000 volunteer hours that our industry’s employees are giving to make a difference for kids and their communities. We still have a number of legislators who we would like to have a banker shadow for. If you are interested, please contact Pam Snow in our office at 622-6131.
MBA LEGISLATIVE COMMITTEE MEETING, Thursday, April 5th at 9 AM at the Augusta Civic Center. This is a change in schedule to accommodate preparing for Bankers’ Day.
State Legislative and Regulatory Issues Update
Maine Civil Liberties Union asks Banking Committee to support more stringent Privacy Standards than those found in GLB. The Maine Civil Liberties Union asked the Banking and Insurance Committee at the March 26th Public Hearing on LD 1640, An Act to Conform the State’s Financial Services Privacy Laws with Federal Law, to support Privacy Laws that provide greater consumer protections than those found in the Gramm-Leach-Bliley Act. In speaking for the MCLU, Executive Director Sally Sutton asked the Committee to recognize that “GLB allows the states to pass greater privacy protections to safeguard the personal financial information of its citizens.” She argued that “Federal law should be used only as a floor, the bare minimum, and that Maine should move beyond GLB to fill in gaps in privacy protection.” Ms. Sutton included in her remarks a model bill which the AULU and its state affiliates are asking Legislatures across the country to adopt in addition to the GLB standards. Also speaking against LD 1640, the King Administration’s Privacy bill, was the Maine Trial Lawyers Association. Their representative spoke of their concern about limiting a person’s right to sue because the bill expressly prohibited “a private right of action.” Individuals, however, are able to sue under other parts of Maine law and can also seek a remedy through the Attorney General or the Department of Professional and Financial Regulation.
Speaking in favor of the legislation were the Commissioner of Professional and Financial Regulation, Catherine Longley; Kevin Savage, President of Saco & Biddeford Savings Institution; and on behalf of the Maine Bankers Association, Ryan Stinneford of Pierce Atwood who introduced an industry and Department supported amendment to further clarify and conform LD 1640 with GLB’s Privacy provisions and definitions. The work session on LD 1640 is scheduled for Wednesday, April 4th.
Bureau of Banking asks Utilities Committee to Consider a Redraft of Telemarketing Bill. Senator Treat and AARP seek to impose more restrictions and cost on Maine’s financial institutions’ and financial institution affiliates’ telemarketing operations.
The Utilities Committee will reopen its discussion of LD 585, An ACT to Remove Telemarketers from the Application of the Consumer Solicitation Sales Act at a work session on Tuesday afternoon, April 3rd. This legislation would conform Maine’s telemarketing laws to Federal law as it applies to financial institutions, supervised lenders, their affiliates, and their agents. This legislation is supported by the Department of Professional and Financial Regulation and is not opposed by the Attorney General. For next Tuesday’s work session, the Bureau of Banking has submitted a re-draft of the Committee’s bill so that it conforms to existing state and federal law and definitions. At the same time, we expect Senator Sharon Treat of Gardiner to present for consideration language to place additional restrictions on Maine based telemarketers and to oppose the redraft of the legislation. Senator Treat is being supported by the AARP. The AARP, in our view, is trying to enact regulations that would essentially make Maine a state where existing Maine based telemarketers would be severely restricted and a state where because state laws were in non-conformance with federal protections that telemarketing operations would avoid as a place to set up their work centers. Unfortunately, we have a few legislators whose priority does not include having Maine host telemarketing centers and the thousands of good quality jobs that we now have. This issue will be one of the ones included in the “talking points sheet” that all Banker’s Day participants will received in advance of their legislator shadowing on Tuesday, April 10th.
Important Trust Legislation to have its public hearing on April 9th at 9:30 AM before the Judiciary Committee.
LD 1573, An ACT to Enact the Uniform Principal and Income Act of 1997, has been submitted for legislative consideration by the Maine Uniform Code Commissioners. This 65-page proposal adopts the newest version of the Uniform Principal and Income Act. On Friday, March 30th, the Maine Bankers Association hosted a meeting with Association members of the MBA Trust Committee and David Hunt, representing a sub-committee of trust lawyers of the Maine Bar Association’s Trust and Estate Section. At this meeting, MBA’s trust committee members recommended that the Maine Bankers Association take a lead position in supporting passage of LD 1573. This legislation, enacting the Uniform Principal and Income Act, is needed to give Maine trustees more flexibility in dealing with their trust responsibilities and trust beneficiaries.
Maine Revenue Service finds that the Maine’s Farm Credit System is enjoying a $1 million plus a year sales tax exemption on leased property arrangements.
The Maine Bankers Association has asked the Taxation Committee to reopen discussions on LD 577, An ACT to Create Equitable Taxation of Leased Property. At the work session on LD 577, the Committee did not have available for its deliberations a fiscal note. A few days later, the Maine Revenue Service, after finally obtaining financial information from Farm Credit, was able to determine that the amount that would be raised in new tax revenue from removing the sales tax exemption which Farm Credit claims on its leased property arrangements would be $942,000 in Year 1, $1,300,000 in Year 2, and between $1,300,000 and $1,400,000 in the years going forward. The Committee vote is presently 11 to 1 “ought not to pass” with the most ardent opponents of this legislation being House Chair Bonnie Green (D) of Monmouth, Rep. Rosita Gagne (D) of Buckfield, and Rep. David Bowles (R) of Sanford. Also voting “ought not to pass” were Senator Richard Kneeland (R) of Easton, Senate Chair Ken Gagnon (D) of Waterville, Rep. Eleanor Murphy (R) of Berwick, Rep. Steve Stanley (D) of Medway, Rep. Randy Bumps (R) of China, Rep. Joe Perry (D) of Bangor, Rep. John Buck (R) of Yarmouth and Rep. Janet McLaughlin (D) of Cape Elizabeth. Our only supporter was Rep. Barney McGowan (D) of Pittsfield. Senator Ken Lemont (R) of Kittery was not present. We will be continuing to be pro-active on this legislation even if the Taxation Committee does not reconsider its actions. Sometimes, you have to educate for a while before the correct action is achieved. Even if we do not succeed with this particular piece of legislation, this sales tax exemption will be included in the review by a Special Legislative Commission on Taxation that is expected to be held this summer with the charge of reporting back to next year’s legislature with recommendations for removing sales tax exemptions.
Department of Human Services Financial Institutions Data Exchange pursuant to Public Law 1998, Chapter 1, and the Personal Responsibility and Work Opportunity Reconciliation Act underway. The Department of Human Services is finally ready to move forward and implement in-state financial institution data matches to help child support programs collect thousands of dollars in unpaid child support. An Agreement outlining the purpose and terms regarding the match process has been completed. The Department has joined a 14-state alliance, which has contracted with Tier Technologies to perform the data match services. The Agreement asks banks to select four quarterly data submission dates and indicate their preference for receiving and sending data, and payment. Questions about the Department of Human Services’ In-State Financial Institution Data Matches (FIDM) should be directed to Mark Walker, MBA’s Vice President, who has worked with DHS on this project.
LD 1630, An Act to Permit Issuance of Certain Types of Consumer Credit Insurance, and LD 1637, An Act to Amend the Revised Maine Securities Act, both Department bills, had their public hearings on Monday, March 26th. There was no opposition to the bills as presented, although a number of speakers, speaking as “neither for nor against”, did say they needed additional time to review LD 1630 and would contact the committee before the work session scheduled for April 4th if they had any questions.
Judiciary Committee supports creation of Commission to Study Privacy Laws.
LD 872, A RESOLVE to Create the Commission to Study Privacy Laws, received a strong majority Committee vote and now will be placed on the House and Senate calendar for further consideration. LD 872 was amended to include studying whether or not the ”recording of private telephone conversations” should be prohibited and whether or not Maine should limit the use of social security numbers for identification. Both of these issues were included in other legislation, which the Judiciary Committee considered. LD 872 would create a commission that would review privacy laws nationwide and make recommendations to the next legislative session regarding changes to Maine law. One of the ten members of the commission would be selected by the Governor to represent the financial services industry. This legislation does have a fiscal note. Thus, if the legislation were enacted, it would have to be funded by the Appropriations Committee. After the budget is enacted there will not be much money on the table to fund commissions and studies; but I have learned to never say never.
LD 849, An ACT Regarding Social Security Numbers Used for Identification receives a unanimous Judiciary Committee work session “ought not to pass” report. While this essentially eliminates the bill from further legislative consideration this session, the topic was included as an amendment in LD 872, the Privacy Commission. LD 849 sought to restrict the use of social security numbers in any business transaction, including all banking functions.
LD 375, An ACT to Ensure Parity in the Sale of Securities by Maine Financial Institutions, our industry bill, has been passed in both the House and Senate and should have its final enactment votes in both bodies late next week and be on the Governor’s desk shortly thereafter. Because the bill has an emergency preamble, it will become law when the Governor signs it.
Federal Issues Update
U.S. Senate Banking Committee opposes a new Federal Examination Fee for State-Chartered Banks. The Senate Banking Committee has made a strong recommendation to the Senate Budget Committee that the proposed new Federal examination fee for state-chartered banks not be included in the Senate budget proposal. Their letter said, “Imposing a new fee…would create an inequity for state-chartered banks…In addition, the profitability of smaller banks (who are mostly state-chartered) would be compromised as that segment of the banking industry would bear significant additional costs.”
OCC recommends against a significant increase in FDIC Insurance coverage. In a letter from the Comptroller of the Currency, John Hawke, to the FDIC regarding its deposit insurance reform proposal, the OCC has stated that it does not recommend a substantial increase in the deposit insurance coverage limit at the present time. The OCC letter, however, did back merging the bank and savings institution deposit insurance funds and moving to a more risk-based approach to pricing of insurance premiums.
Level of Non-Performing Commercial Loans raises concerns with the FDIC. Problem commercial loans reached 1.52 percent of total commercial loans last September – the highest level in six years. The FDIC in its “Regional Outlook” report said, “Signs of a slowdown in the economy raise concerns about he severity of commercial loan problems, a situation we will watch closely in the coming months.”
Proliferation of different state lending rules threatens lending markets. The American Bankers Association has released the results of study by Robert Litan of the Brookings Institute concerning the impact of state laws on reducing “predatory lending”. In the study, Litan says, “There is already ample federal legislation on the books aimed at exposing and curbing predatory lending. The proliferations of different state lending rules threatens to balkanize the lending market and make it very costly, and potentially impossible, for lenders to offer nationally uniform mortgage loan contracts. If lenders are unable to offer nationally uniform mortgage loan contracts, their costs will be higher and those costs will be passed on to the consuming public, especially underserved borrowers. The best way to combat predatory practices is through increased funding for enforcement of existing laws and consumer education.”
Senator Shelby introduces interest on corporate checking account legislation. As the Senate counterpart to legislation already introduced in the House and scheduled for mark-up this week by the House Financial Services Committee, S. 601, the Small Business Checking Regulatory Relief Act of 2001 would permit 24 transfers until September 1, 2002; repeal the prohibition on paying interest on demand deposits effective September 1, 2002; and would provide the Federal Reserve flexibility in setting reserve requirements. The Senate Banking Committee is likely to consider S. 601 before its summer break. Both the House and Senate bills are given a good chance of passage.
House Financial Services Committee passes H.R. 974, the Small Business Interest Checking Act, action by full House expected next week. H.R.974, the House counterpart to Senator Selby’s bill S. 601, would immediately provide for 24-transaction internal sweep accounts and repeals the prohibition on payment of interest on corporate checking two years from the date of enactment. The Committee also adopted an amendment to require the Fed to provide Congress with an annual report on bank fees. The House is expected to pass H.R. 974.
If you would like to begin receiving the MBA Legislative Update via E-Mail, please send your request to psnow@mainebankers.com and we will no longer mail the update to you. Thank you for helping us to save on postage!
