Indiana State Legislative Update February 6, 2020

February 06, 2020 3:55 PM | Alan Thorup (Administrator)

STATEHOUSE SUMMARY

This past week marked the final week for committees to vote on bills due to the legislative calendar’s deadlines for committee activity. Those deadlines were last Tuesday for the House and Thursday for the Senate. This week will mark both second and third reading deadlines for all bills. This means that any bill that did not receive a committee vote last week and/or fails to move from third reading this week is considered dead for purposes of legislative tracking. Despite the short timeline provided, there are a number of bills moving through the process. The IMBA will be monitoring second reading amendments to notable bills this week and will be preparing to continue the work on several legislative action items during the second half of session, which will resume Feb. 10.


BILLS TO WATCH

SB 43 – Fraud Consolidation

Sen. Michael Young (R-Indianapolis)

Why it matters

SB 43 attempts to consolidate the entire criminal fraud statute in the Indiana code. The IMBA is monitoring the bill as it consolidates crimes against a financial institution. To date, the IMBA has no concerns with SB 43.

Latest action

The bill was heard in the Senate Corrections and Criminal Law Committee on Jan. 28. It is now eligible for second reading amendments.


SB 327 – Reporting of Consumer Loans by Unlicensed Lenders

Sen. Andy Zay (R-Huntington)

Why it matters
The bill requires the reporting of base-level consumer loan information to a private reporting agency approved by the Department of Financial Institutions under Chapter 7 (the payday lending section of the code). There is currently only one vendor approved by the department under Chapter 7. The requirement would apply to all lenders, both domiciled in state and out-of-state. Per IMBA conversations about the bill, this was an unintended consequence of the drafting of the bill. The IMBA was concerned about the new burdens this bill placed on lenders. Sen. Zay worked with the IMBA to clarify that the bill does not apply to depositories.

Latest action
This bill was heard in the Senate Insurance and Financial Institutions Committee on Jan. 22 and held. The bill was amended in the committee on Jan. 29 to address the IMBA’s concerns.


SB 350 - Central Indiana Regional Development Authority

Sen. Travis Holdman (R-Markle) 

Why it matters

This bill authorizes counties and municipalities within the Indianapolis metropolitan area to establish a Central Indiana Regional Development Authority Pilot that will sunset on July 1, 2025. It requires counties and municipalities that wish to establish the development authority to adopt substantially similar resolutions to adopt a preliminary strategic economic development plan. The bill creates a development authority fund to be established and to be used for purposes of economic development. The IMBA is monitoring the broad powers granted to the board and the financing structure that is currently permitted under the bill.

Latest action

The bill was amended in the Senate Tax and Fiscal Committee on Jan. 28. It has moved from second reading to third reading and is currently awaiting a final vote by the Senate.


SB 395 – Uniform Consumer Credit Code

Sen. Eric Bassler (R-Washington)

Why it matters
This bill originated from recommendations made by the Financial Institutions Study Committee last summer. The IMBA provided suggested changes to the Uniform Consumer Credit Code for purposes of reforming the antiquated uniform law. However, the bill was amended in the Senate Insurance and Financial Institutions Committee with several significant changes. Most notably, the bill still attempts to fix the problematic refundable calculation of the prepaid/origination fee by establishing a flat origination fee / prepaid finance charge of no more than $75 for a consumer loan under $2,000, $150 for a consumer loan between $2,000 and $4,000, and $250 for a consumer loan over $4,000. The bill also raised the state usury rate from 25% to 36% but was amended to keep the rate at 25%. The bill was amended to remove several concerning provisions expressed by the IMBA but still contains several items that are in need of additional work. The IMBA is continuing to work on addressing those issues.

Latest action
This bill was heard in the Senate Insurance and Financial Institutions Committee on Jan. 22 and held. The bill was amended in the committee on Jan. 29 with a substantial amendment restructuring a number of provisions in the original draft.


SB 407 – Consumer Credit Transactions

Sen. Greg Walker (R-Columbus)

Why it matters

The IMBA has concerns with SB 407 as it would require all lenders doing business in Indiana to adhere to the Uniform Consumer Credit Code whether or not they are domiciled in Indiana. Currently, national banks are governed by federal laws specific to consumer loans, and the IMBA is concerned that this bill would have unintended consequences of requiring them to adhere to the UCCC. Additionally, the bill prohibits a lender from assessing the authorized nonrefundable prepaid finance charge on the second or any subsequent refinancing of a consumer loan made to a borrower by the lender. Finally, the bill was amended in committee with language that permitted the DFI to evaluate and ultimately regulate affiliate relationships of Indiana-based banks. The IMBA is concerned about the new burdens this bill places on lenders and is working to address those concerns.

Latest action

The bill was heard in the Senate Insurance and Financial Institutions Committee on Jan. 29 but was held due to a number of concerns expressed by the committee members.


SB 444 – Public Deposits With Credit Unions

Sen. Chip Perfect (R-Lawrenceburg)

Why it matters

The IMBA is opposed to this legislation. A proposal of increasing the cap to 25% was suggested as a possible change to the bill. The IMBA discussed this approach internally and, due to much concern, remains opposed to the legislative proposal.


Latest action

The bill was assigned to the Senate Tax and Fiscal Policy Committee and will not receive a hearing.



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