LANSING
Payday Lending in the Legislature
The Michigan House Financial Services Committee took testimony today on HB 5290 and SB 632 to limit deferred presentment transaction companies to charging more than the 36% usury rate cap. The MBA has long been engaged in discussions with the bill sponsors and legislative and committee leadership on a variety of subtopics around payday loans. When it comes to access of credit, we are always here to serve our customers with lending products that meet their needs. However, when a customer is unable to meet credit requirements, they are in need of a properly regulated subprime lender. There is significant support for the passage of this legislation and the MBA via our policy committee determination, remains neutral on these bills. We have also made it clear that we support a system that does not create greater ease for a well qualified customer to go to a payday lender to their detriment.
LANSING
House Labor Committee Hears State IRA Plan
MBA attended a committee hearing on a state funded IRA program for employers who do not currently offer retirement savings plan to employees. MBA supports encouraging individuals savings but has some concerns with mandates included in the bill on employers. We will continue to monitor this legislation and work with bill sponsors to improve.
LANSING
Senate Civil Rights and Judiciary Committee
MBA is working with bill sponsor Representative Will Snyder to include a financial institutions exemption in House Bill 4960. The bill would bar employers from maintaining past criminal records of prospective applicants.
ELECTIONS
Michigan House Special Election Results
Democrats won back a majority in the Michigan House and restored their party’s full control of state government Tuesday thanks to victories in two special elections in vacant seats in Warren and Westland. Mai Xiong won the special election in the 13th District, which covers Warren and part of Detroit, while Peter Herzberg won in the 25th District, which contains the cities of Wayne and Westland. Both candidates were favorites in the heavily Democratic districts. The lower chamber has been tied 54-54 between Democratic and Republican lawmakers since November.
MBA will be reaching out to begin relationship building and banking education efforts to these newly elected Representatives in the coming days.
FINANCIAL LITERACY
MI Money Matters Provides Michiganders with a Virtual Tutor for Financial Empowerment
As a part of Michigan’s Financial Literacy Month, Lt. Governor Garlin Gilchrist II announced the launch of “MI Money Matters,” a free financial empowerment platform for all state residents and beyond.
Powered by Enrich – a personal finance program endorsed by the National Association of State Treasurers -- MI Money Matters features dynamic tools and courses, delivering a highly personalized and interactive experience that includes a financial behavior assessment that analyzes each user’s financial “personality.” Learn more.
FRAUD
FinCEN Warns of Financial Fraud with Counterfeit Passport Cards
The Financial Crimes Enforcement Network, in coordination with the U.S. State Department, issued a notice to financial institutions on fraud schemes related to the use of counterfeit U.S. passport cards. The notice provides an overview of typologies associated with U.S. passport card fraud, lists select red flags to assist financial institutions in identifying and reporting suspicious activity, and reminds financial institutions of their reporting requirements under the Bank Secrecy Act, according to FinCEN. Read the notice.
CONGRESS
ABA Supports Bills to Overturn Late Fee Rule, Prohibit Insurance Data Collection
ABA expressed support for three bills that appeared before the House Financial Services Committee earlier this week during a markup hearing, including a resolution to overturn the CFPB’s credit card late fee rule. H.J. Res. 122, sponsored by Rep. Andy Barr (R-Ky.), would overturn the rule if approved by both houses of Congress and signed by the president. In its letter, ABA noted that it had previously joined other associations in warning about the long-term harm the rule would impose on consumers. Read more.
CONGRESS
Senate Resolution Would Overturn SEC Climate Disclosure Rule
More than 30 senators are cosponsoring a Senate joint resolution to overturn the Security Exchange and Commission’s climate disclosure rule. The resolution, which is being led by Senate Banking Committee Ranking Member Tim Scott (R-S.C.), would strike down the rule if passed by both houses of Congress and signed by the president. An identical resolution has been introduced in the House. Read more.
REGULATORS
Bowman Skeptical of Creating Collateral Requirement for Discount Window
A proposal to require banks to hold collateral at the Federal Reverse discount window in anticipation of the need for accessing discount window loans in the future would be a radical shift in policy with possible unintended consequences, Federal Reserve Governor Michelle Bowman said yesterday. During a roundtable event in Washington, D.C., Bowman spoke about bank liquidity and the Fed’s role as lender of last resort following the 2023 failure of Silicon Valley Bank. Bank regulators are planning to introduce a package of liquidity regulations later this year in response to last year’s bank failures, including possible changes to the Fed discount window. Read Bowman’s remarks. Read ABA’s letter.
REGULATORS
Fed's Barr Says Liquidity Pressures Have Eased Since Silicon Valley Bank
Banking regulators are no longer seeing the liquidity pressures on banks that they saw following the failure of Silicon Valley Bank last year, Federal Reserve Vice Chairman for Supervision Michael Barr said. During a Q&A at a Washington, D.C., economic conference, Barr reiterated that the banking system is “sound and resilient,” although he added that there remain “pockets of risk.” Watch a recording of the Q&A .
REGULATORS
MBA, ABA, State Associations Urge CFPB to Withdraw Overdraft Proposal
Warning that “consumers will lose” if the CFPB’s overdraft proposal is finalized, MBA, ABA and 51 state bankers associations urged the CFPB to withdraw it earlier this week. The proposal would re-classify overdraft as “credit,” despite Congress’ determination 50 years ago to the contrary and would permit financial institutions to offer overdraft under the existing Regulation E framework only if their overdraft fee is below a “breakeven” fee or a “benchmark” fee set by the agency. Charging a fee that exceeds this government price cap would subject overdraft services to the requirements of the Truth in Lending Act and Regulation Z. Read the joint letter. Read the MBA letter.
REGULATORS
Fed’s Bowman: Proposed Bank Merger Reforms Step in Wrong Direction
Recent proposals to reform the regulatory approval process for bank mergers and acquisitions may make the problem worse, as policymakers have put improving the speed for reaching decisions on merger applications “lower on the list of priorities,” Federal Reserve Governor Michelle Bowman said earlier this week.
The OCC in February proposed to end the time limit for automatic approvals of mergers of banks that it supervises as well as reevaluate its approval process, while the FDIC last month proposed a major overhaul of its approval process. Speaking at a Kansas City Fed event on the future of banking, Bowman was critical of the FDIC proposal in particular, saying that some of the proposed changes—such a move away from deposit-based analysis in merger consideration—could result in more delays in the process.Read Bowman’s remarks.
REGULATORS
FDIC Consumer Compliance Supervisory Highlights
The FDIC’s Consumer Compliance Supervisory Highlights is a publication that features articles of interest to the banking industry. Its purpose is to enhance transparency regarding the FDIC’s consumer compliance supervisory activities and provide a high-level overview of consumer compliance issues identified in 2023 through the FDIC’s supervision of state non-member banks and thrifts. Topics include supervisory observations related to consumer protection laws, examples of practices that may be useful to institutions in mitigating risks, regulatory developments, consumer compliance resources, and an overview of consumer complaint trends.
LEGAL ISSUES
Federal Court Pauses CRA Rule Implementation Following ABA Lawsuit
A federal judge in Texas late last week issued a preliminary injunction against enforcing new rules implementing the Community Reinvestment Act in a lawsuit brought by ABA and other business groups. Read the statement.
CYBERSECURITY
Proposed Rule to Require Reporting of Cyberattacks, Ransomware Payments
Last week, the Cybersecurity and Infrastructure Security Agency—part of the Department of Homeland Security - issued a notice of proposed rulemaking to implement a 2022 law requiring financial institutions and other “critical infrastructure” businesses to report cyber incidents and ransomware payments to the department and agency. Read more.
CFPB
CFPBs Proposed Rule On Overdraft
We submitted a comment letter to CFPB Director Rohit (verify spelling please) Chopra pertaining to the CFPB proposed rule on overdraft services earlier this week. The Association stated that overdraft fees are not "junk fees" and serve a vital consumer need. Read the letter.
REGULATORS
ABA Urges CFPB to Withdraw Proposed Ban on Certain NSF Fees
ABA urged the CFPB to withdraw a proposed rule to prohibit certain insufficient funds fees as “abusive,” saying the bureau is attempting to regulate a largely hypothetical situation while advancing an aggressive reading of its authority to prohibit abusive acts or practices.
In a comment letter, ABA noted that CFPB’s Truth in Savings Act rule already requires financial institutions to disclosure fees at account opening. It also noted that banks have devoted considerable resources to developing mobile and online banking, low balance alerts and numerous other tools to promote consumer access and control of their finances. Given the availability of such tools, financial institutions are not taking unreasonable advantage of consumers, as the bureau alleges, ABA said. In addition, the CFPB wrongly concluded that disclosure is not a remedy because some consumers won’t understand even the clearest disclosure, the association said. Read the letter.
COMMITTEES
Speaker Johnson Appoints Congressman John Moolenaar to Lead Select Committee on Strategic Competition Between the United States and the China
Speaker Johnson appointed Representative John Moolenaar (MI-2) to serve as Chairman of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party.
The House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party is responsible for assessing the threats to the economy and national security posed by the government of China and proposing plans to ensure a strong American future. Rep. Moolenaar will assume the role of Chairman after current Chairman Rep. Mike Gallagher exits Congress.
UPOAA
Uniform Power of Attorney Act Webinar
April 23 | 3:00-4:00 pm EST
A new law in Michigan is designed to provide for increased accessibility, effectiveness, and standardization for POAs. The Uniform Power of Attorney Act (UPOAA) was signed into law by Governor Gretchen Whitmer on November 7, 2023, and will take effect on July 1, 2024.
Speaker: Melissa K. Bridges, Bodman
After registering, you will receive a confirmation email containing information about joining the meeting. A recording will be available. Register.
REDISTRICTING
Court Approves Redistricting Commission Map Over Plaintiff Objections
The federal three-judge panel overseeing the redrawing of Detroit's state House districts ruled that the Independent Citizens Redistricting Commission's Motown Sound remedy map meets muster with federal law and will therefore be implemented for the upcoming 2024 elections. Read more.
COMMUNITY REINVESTMENT ACT
Agencies Extend Applicability Date of Certain CRA Rule Provisions
The Federal Reserve, FDIC, and OCC last week jointly issued an interim final rule that extends the applicability date of certain provisions in the Community Reinvestment Act rule that was issued in October 2023. Specifically, the agencies extended the applicability date of the facility-based assessment areas and public file provisions from April 1, 2024, to Jan. 1, 2026. As a result, banks will not have to make changes to their assessment areas or their public files under the CRA rule until Jan. 1, 2026.
The agencies also issued what they said are technical, non-substantive amendments to the CRA final rule and related agency regulations that reference it. For example, one amendment clarifies that banks do not need to make changes to their public notices until Jan. 1, 2026. Read the interim final rule.
REGULATORS
Fed’s Barr Says ‘Broad’ Changes Coming to Basel III Capital Proposal
Federal Reserve Vice Chairman for Supervision Michael Barr said Friday that regulators expect “broad and material” changes are coming to the proposed Basel III endgame capital standards, Bloomberg News reported. Speaking at a University of Michigan event, Barr echoed Fed Chairman Jerome Powell’s March 6 testimony before the House Financial Services Committee, in which he told lawmakers that significant changes will likely be made before the rule moves forward. Barr is the chief proponent of the proposal. Read the Bloomberg article. Read the analysis.
REGULATORS
FDIC Proposes to Expand Criteria for Bank Merger Evaluations
The FDIC board voted 3-2 to pursue potential changes to how the agency will evaluate bank merger applications, including broadening the number of competitive factors it will take into consideration when deciding whether to approve or deny applications, and requiring a “thorough accounting” of the potential effects on communities, including possible branch closures or relocations. Read the proposed policy.
REGULATORS
FDIC Brokered Deposits
The FDIC has updated the FDIC’s Brokered Deposits webpage, available on the Banker Resource Centerwebsite, that includes comprehensive information about the changes made to the brokered deposits regulation and the interest rate restrictions, which became effective on April 1, 2021.
LANSING
Payday Loans Update
The Michigan Senate will be taking a vote on two Payday Lending Bills later today. SB 632 is a bill the MBA is neutral on and would cap the usury rate at 36% in the state. We support HB 4343 which deals with reporting from DIFS on Payday Lending Activity in Michigan.
GRASSROOTS
Rep. Kristian Grant's Upcoming Events in Grand Rapids
Rep. Grant (D-Grand Rapids) who met with the MBA this past week to discuss housing issues has two upcoming events in which she plans to engage Grand Rapids bankers.
Urban Economic Roundtable
April 8th, 10:00 am-2:00 pm, 1167 Madison Ave. SE, Grand Rapids, MI 49507
This is an annual event the Rep. hosts where legislators and community partners gather to discuss economic development in urban cores. This year’s focus is housing.
Women in Business Celebration
March 30th, 12:00-2:00 pm, Women’s Resource Center
This event is a way to celebrate small and micro businesses from Grand Rapids and to connect them to resources.
If you are interested in these events, please contact Alex Morris at amorris@michigan.bank.
REGULATORS
OCC’s Hsu: Agencies Considering Changes to Operational Resilience Requirements
Banking regulators are considering what changes to the U.S. operational resilience framework may be appropriate as the risk for a major disruption in critical banking services grows, Acting Comptroller of the Currency Michael Hsu said earlier this week. Speaking at an international banking conference in Washington, D.C., Hsu said that as banking services continue to grow and as technology and third parties play a greater role in providing those services, “the threat surface for disruptions is expanding.” Read Hsu’s remarks.
TAX ISSUES
IRS Holds Off on IVES Updates, Seeks Industry Input
The IRS last week said it would postpone policy updates to the Income Verification Express Services program. IVES allows taxpayers to authorize third parties to request their tax return or wage transcripts to obtain a residential or commercial mortgage. Participants can include banks, credit unions, mortgage brokers and others servicing clients within the mortgage lending industry. Read the IRS notice.
FRAUD
AG Nessel and Michigan Bankers Association Kick-off National Consumer Protection Week with the #BanksNeverAskThat Anti-Phishing Campaign
To kick-off National Consumer Protection Week, the MBA and Michigan Attorney General Dana Nessel partnered to promote #BanksNeverAskThat, a nationwide campaign educating consumers about the persistent threat of phishing scams. Since pitching to statewide media, 25 media outlets have published the press release and 9 television networks have interviewed the Attorney General statewide. Read the release. Watch the video.
ECONOMY
Michigan Banks Encourage Businesses in Northern Michigan and the Upper Peninsula to Contact Their Bank if Experiencing Economic Hardship Due to Weather-Related Issues
A few weeks ago, the UP 200 was canceled due to a lack of snowfall and an unusually warm winter. Despite this setback, the economic development efforts associated with the event persisted. Roxanne Daust, President and CEO of Range Bank, and Rick Nebel, CEO & Director of Peoples State Bank, both active members of the board of InvestUP, engaged in discussions addressing the impact on businesses in the U.P. and Northern Michigan that heavily rely on typical weather patterns for their livelihoods. Notably, both Daust and Nebel have a history of collaboration with InvestUP's director, Marty Fittante, through their involvement with the MBA during Fittante's tenure in Senator Casperson's office. The conversations delved into past initiatives for weather-related economic relief, involving the Michigan Economic Development Corporation (MEDC), as described in the following press release. Read the press release. Read the press release.
While an EIDL loan may be suitable in some cases, it is not always the ideal solution. Encouraging troubled customers to communicate their needs with their bankers, the MBA emphasizes the importance of finding collaborative solutions. The MBA extends gratitude to Rick, Roxanne, Marty, and several other Northern Michigan and U.P. bankers who provided valuable input.
FEDERAL RESERVE SYSTEM
Comment Letter to the Fed on Regulation II Proposed Rule
McClain, Huizenga and Bergman joined together on a letter to Chairman Jerome Power, expressing their concerns about the proposed changes to Regulation II. They have highlighted potential repercussions on low-balance, overdraft fee-free accounts, asserting that the proposed rule's language may unintentionally undermine recent, significant progress in integrating low-moderate-income (LMI) consumers into the mainstream banking system.
"We believe the language of the proposed rule could unintentionally undermine recent, significant progress in bringing low-moderate-income (LMI) consumers into the mainstream banking system," they stated.
The MBA commends Congresswoman McClain, Congressman Huizenga, and Congressman Bergman for their proactive stance on this matter. Read the letter.
GARNISHMENT
Progress on Garnishment Bills
MBA met last week, in our continued efforts to reform aspects of HB 4900 and SB 408, with the workgroup addressing concerns. In and ideal world, need based government benefits would be protected from garnishments, however, most state benefits and tax deductions are not specifically coded for identification and would be nearly impossible to isolate in garnishment calculations. At a minimum the industry needs and effective hold harmless for these instances where a bank becomes the collection arm of the courts. Work with re-evaluating realistic garnishment thresholds is also taking place.
GRASSROOTS
MBA with Lansing Leadership
The MBA advocacy team met this week with the quadrant leaders on policy initiatives and concerns. With a desire to focus on how the state addresses economic growth and housing, we shared our overall concerns with the flow likely well intended but detrimental policies that have been introduced that derails progress. MBA and our member banks will continue to have active seats at the table with both parties in both chambers of state government to shape policy best for banks, our customers and communities.
CONGRESS
Powell: Broad Changes Likely Coming to Basel Endgame Proposal
Federal Reserve Chairman Jerome Powell said earlier this week that he expects there will be “broad and material” changes to the proposed Basel III endgame capital standards before they are finalized, although he was unsure whether the Fed would re-propose the rule to kick off a second round of public comment and analysis.
Powell appeared before the House Financial Services Committee for the first of two Fed reports to Congress this week. Questioned by committee Chairman Patrick McHenry (R-N.C.) about public comments from a broad range of interests expressing concern about the proposed standards, Powell said the Fed has just reached the stage where it can begin making decisions about how to proceed but not on the substance of the proposal itself. Watch a recording of the hearing.
CONGRESS
Powell: Fed Will ‘Carefully’ Review Input on Debit Interchange Proposal
Fed Chairman Jerome Powell said yesterday during a House Financial Services Committee hearing that the agency will “carefully” review all public comments it receives about its proposal to lower the cap on debit card interchange fees, with the comment period recently extended to May 12. Committee member Rep. Blaine Luetkemeyer (R-Mo.) questioned Powell about the potential for the rule change to harm low- to moderate-income individuals by making it more difficult for banks to provide affordable banking services. In response, Powell said the rule is still out for public comment, and that federal law requires the Fed to make a decision on the cap.
VIEWPOINT
ABA Questions Unexplained FDIC, Fed Decisions That Cost Banks Billions
With the FDIC’s cost estimate for the spring 2023 bank failures to the Deposit Insurance Fund (DIF) coming in 25% higher than predicted, eyes are on decisions the FDIC and Fed made that may have driven up the cost. In particular, a new ABA Viewpoint article explores the FDIC’s decision to seek financing from the Federal Reserve instead of other, cheaper sources, as well as the Fed’s unexplained decision to charge the FDIC “penalty pricing” on the loan—decisions that drove the cost to the DIF up by as much as $2.5 billion. Read the article.
POLITICS AND POLICY
CFPB $8 Credit Card Late Fee Rule Comes Amid White House Fee Crackdown
The Consumer Financial Protection Bureau will release a final rule last week that is expected to save consumers $10 billion a year in credit card late fees. The rule is part of a larger effort by the White House to crack down on illegal fees and price hikes that President Biden will address in the State of the Union. Read more.
CONGRESS
Growing Number of Lawmakers Seek Investigation of Navy Federal Credit Union
Two dozen House lawmakers last week called on federal regulators to investigate the nation’s largest credit union following reports of racial disparities in its lending practices, adding their voices to a growing number of members of Congress demanding answers from the institution.
In a joint letter, 21 members of the New Democrat Coalition and Congressional Hispanic Caucus urged regulators to ensure that Navy Federal Credit Union is adhering to fair lending laws following a CNN report that concluded the institution rejected minority applicants for conventional home purchase mortgages at a much higher rate than white applicants. They also sent a letter to former Navy Federal CEO Mary McDuffie asking a series of questions about the credit union’s fair lending processes. (McDuffie stepped down at the end of February and was succeeded by Dietrich Kuhlmann.)
In a separate joint letter last week, Reps. Emanuel Cleaver, II (D-Mo.), ranking member of the House Financial Services Subcommittee on Housing and Insurance, Steven Horsford (D-Nev.), chairman of the Congressional Black Caucus, and Sydney Kamlager-Dove (D-Calif.) urged the CPFB and National Credit Union Administration to investigate Navy Federal’s lending practices. Read the New Democrat Coalition and Congressional Hispanic Caucus letters. Read the joint letter from the three lawmakers.