Indiana State Legislative Update March 4, 2020

March 04, 2020 4:05 PM | Alan Thorup (Administrator)

STATEHOUSE SUMMARY

This past week marked the final week of committee hearings for the 2020 legislative session. A few bills that had passed the first chamber, or chamber of origin, died as a result of inaction by committees. The bills that are still alive must receive a simple majority third reading vote by Tuesday of this week to remain alive. This week also initiates the final element of the session, a process labeled conference committee. This process of reconciliation of changes made to bills by both chambers will be monitored very closely due to the last-minute changes that occur.


BILLS TO WATCH

SB 327 – Reporting of Consumer Loans by Unlicensed Lenders

Sen. Andy Zay (R-Huntington)

Rep. Martin Carbaugh (R-Fort Wayne)


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

The bill was heard in the House Financial Institutions Committee on Feb. 18 and was not brought back for vote, effectively killing the bill.


SB 395 – Uniform Consumer Credit Code

Sen. Eric Bassler (R-Washington)

Rep. Woody Burton (R-Whiteland)


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. The bill was amended in the Senate Insurance and Financial Institutions Committee with several significant changes, however. 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 provisions about which the IMBA expressed concern, but still contains several items that are in need of additional work. The IMBA is continuing to work on addressing those issues.

Latest action

The bill was heard and amended in the House Financial Institutions Committee on Feb. 25. It was passed by the committee 6-3. The bill is now eligible for second reading amendments in the House.


SB 408 – Various Tax Matters

Sen. Travis Holdman (R-Markle)

Rep. Tim Brown (R-Crawfordsville)


Why it matters

The bill is the annual Department of Revenue legislation and makes various changes to Indiana’s tax code. Notably, the bill clarifies the treatment of factored receivables under the FIT. The bill was all significantly amended in the House Ways and Means committee. The IMBA monitors this bill every session for changes to Indiana’s tax code as it relates to financial institutions. The IMBA has not identified any concerns with the bill or amendment.

Latest action

The bill is currently awaiting possible amendments on second reading in the House.


HB 1353 – Financial Institutions and Consumer Credit

Rep. Woody Burton (R-Whiteland)

Sen. Eric Bassler (R-Washington)

Why it matters

The IMBA supports HB 1353, which is the annual bill from the Department of Financial Institutions. Every year, the DFI has an agency bill that cleans up portions of the code that it identifies as needing to be updated. The IMBA has reviewed the bill and supports the changes. There is one section of the bill that the IMBA sought clarification to fix: the issue of which delinquency charge may be assessed. Last session the permissible delinquency charge was set in statute at $25 through the passage of HEA 1136. There was some confusion within contracts whether the delinquency share should be $25 or the former indexed rate according to the Consumer Price Index. The IMBA worked with legislators to clarify this inconsistency.

Latest action

The bill was heard and amended in the Senate Insurance and Financial Institutions Committee on Feb. 26. It was passed by the committee 6-0.



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