January 15, 2016

2016 Legislative Session Underway

The second year of the two-year biennial of the Georgia General Assembly got off to a good start Monday. We expect a fast session with the leadership saying they hope to complete the 2016 session by March 24.
Gov. Nathan Deal gave his State of the State address this week and talked about many of the positive things going Georgia’s way. Revenues continue be strong, unemployment numbers are coming down already and more than 3,000 new jobs are being announced this month, the transportation initiative passed last year and a list of infrastructure improvement projects totaling more than a billion dollars was released, and he plans to add to the state’s rainy day fund. The Gov will also focus on workforce development and improving the educational experience in Georgia’s schools.

Big Crowds Attend GBA’s Events

Our thanks to the hundreds of bankers and special guests who participated in GBA’s Economic and Legislative Forum and Legislative Reception on Wednesday. At the Forum, Lt. Gov. Casey Cagle talked about the importance of Georgia’s banks, education and being a state in which it is good to do business. Senate Banking & Financial Institutions Committee chairman Burt Jones (R-Jackson) discussed the desire to keep Georgia’s banking laws from being overly complex and burdensome. Senate Majority Leader Bill Cowsert (R-Athens) emphasized the need for the state to focus on protecting its citizens from terrorism. And, House Ways and Means Committee Chairman Jay Powell (R-Camilla) said his committee will focus a lot on making sure tax exemptions are meaningful and result in positive economic growth.

GBA’s Priority Bills This Session

All bills not passed in the 2015 session are carried over and available for action in the 2016 session. GBA will be concentrating our attention on our three priority bills:

Banking Department Housekeeping Bill. GBA’s Code Review Task Force chaired by Brad Miller at United Community Bank, Blairsville, helped develop the Department of Banking and Finance annual housekeeping bill that will help modernize Georgia’s banking code. Among the topics in the bill will be: 1) removing references to building and loan associations as those charters no longer exist; 2) recognizing the preemption of the DBF’s role in approving branches of out-of-state institutions, 3) removing registration requirements for institutions over which the DBF has no supervisory role; 4) removes prohibitions for state-chartered banks to charge a fee to cash “on us” checks; 5) setting up an application process for potential mergers of merchant acquirer limited purpose banks; 6) removes the reserve requirements referenced Federal Reserve Regulation D so that the provisions will only be applicable to institutions whose deposits are not federally insured; 7) removes the authority of the DBF to present a case directly to a grand jury; 8) reduces the violation of an institutions charter or bylaws from a felony; 9) clarifies that an institution operating without federal deposit insurance is a transitional situation; 10) revises the requirements for the DBF to post bonds to ensure employees’ faithful performance; 11) removes barriers for the conversion of a federal savings bank into a state savings bank; 12) authorizes banks to participate in cross-guaranty state-level collateral pools; and 13) establishes a regulatory structure for virtual currencies. Other sections of the bill apply only to credit unions or non-bank entities registered with or supervised by the DBF. Rep. Bruce Williamson (R-Monroe) is expected to introduce the bill in the House.

Multibank Pledging Pool. GBA will be coordinating a bill adding a multibank, contingent-liability pledging pool option to the current direct-pledge and bank-level pool methods for collateralizing public deposits. The new option will be mandatory for banks over $50 billion in assets and optional for banks below $50 billion in assets. Banks must be eligible to be a depository for state funds to join the multibank pool. The pledge levels will be based on the health of the bank and are expected range from 25 percent to 125 percent. Sen. John Kennedy (R-Macon) will be introducing the bill in the Senate.

Garnishment. Legislation has been introduced, SB 255 by Sen. Jesse Stone (R-Waynesboro), to address the reasons a federal judge ruled portions of Georgia’s garnishment statute is unconstitutional. GBA supports the concept. The bill is the result of a task force put together at the request of House Judiciary Chairman Wendell Willard (R-Sandy Springs). The task force met throughout the fall and had representatives from creditor groups and plaintiffs. Serving on the task force and paying particular attention to the often dual roles banks play when responding to garnishments and filing garnishments were Adam Cleveland of the Thompson O’Brien firm in Norcross, and Ellen Fleming, and in-house attorney at SunTrust. Our thanks to Cleveland and Fleming for their work.

Among the major changes for banks when they are served with garnishment will be the following:
  • Garnishments at banks would be only 24 hours in length, down from 30-45 days in current law.
  • Further protection would be added from permanent default judgment against a garnishee.
  • Garnishees would be required to send additional paperwork to any defendant(s) in each garnishment.

And these are the major changes when a bank or the bank’s attorney files a garnish as plaintiff:
  • Plaintiffs will have increased requirements for sending notice to defendants.
  • Garnishments at financial institutions would include only 24 hours, not 30-45 days
  • Defendants would have a right to an immediate hearing on garnishment without statutory limitations on defenses.
  • A plaintiff desiring to appeal a trial court ruling of exempt funds would face prohibitive costs and liability risks.

Other Issues We Expect This Session

GBA often gets involved to provide context to legislators on legislation affecting our members. We make every effort to help perfect legislation so that it accomplishes the objectives of the legislative author without causing undue problems for banks in serving the needs of their communities. Sometimes that’s just not possible and GBA has to fight against legislation that would be detrimental. Following is a list of bills we expect to be engaged on in 2016:
Self-administered Trust (a.k.a. Domestic Asset Protection Trust or Self-settled Spendthrift Trust). We expect a revised version of a bill to move forward in 2016 that would provide for the establishment of self-settled trusts in which individuals can set aside assets for their own use without fear of adverse creditor claims. HB 456 – Rep. Tom Weldon (R-Ringgold). GBA monitoring.
Boat titling. Legislation has been introduced to establish a boat and boat motor titling program using the same Electronic Lien Titling process currently used for motor vehicles. HB 356 – Rep. Ron Stephens (R-Savannah). The bill was subject of a hearing in subcommittee this week. GBA supports the concept.
Guarantor obligations. We may see legislation prohibiting contract language allowing a guarantor to waive confirmation rights in a foreclosure. GBA likely opposes.
Breach notification. Legislation is expected to be introduced by Sen. John Albers (R-Roswell) requiring businesses and governmental agencies to notify the public within 72 hours of discovering a data breach. GBA prefers a national notification standard and will likely oppose this legislation.ip & PIN. Legislation is expected to be introduced requiring credit cards issued with EMV chips to also be issued with PINs. GBA opposes.
Savings accounts for first-time homebuyers. Legislation has been introduced authorizing the establishment of a special interest-bearing savings account by a first-time buyer. The contributions and interest earned would be tax exempt. HB 530 – Rep. Bruce Williamson (R-Monroe). GBA supports.
Digital account access. Legislation has been introduced to allow a personal representative access to a deceased person’s digital accounts. HB 274 – Rep. Jeff Duncan (R-Cumming). GBA supports concept.
Foreclosures. A number of foreclosure-related bills are pending and more are expected challenging portions of Georgia’s non-judicial foreclosure. A complete list may be found on the State Issues page of our website. GBA opposes.
Homeowners association superlien. An effort last year was defeated at the committee level to pass a bill that would require six months of unpaid homeowner association assessments to be paid from foreclosure sale proceeds. The bill could be revived. SB 117 – Sen. Jesse Stone (R-Waynesboro). GBA opposed.
D&O liability. In response to the Loudermilk and Skow court decisions about Georgia’s business judgment rule related to director and officer liability, legislation may be introduced clarifying the process issue left subject to ordinary negligence. GBA supports concept.
E-discovery. Previous efforts have failed that would have crafted new provisions within the Georgia Civil Practice Act related to the discovery, preservation and production of electronically stored records in response to subpoenas. While not a bank-specific issue, because financial institutions are often subpoenaed for records, both physical and electronic, GBA will monitor the session and provide input to the various parties to ensure an efficient, cost-effective process is preserved. GBA monitoring.
Good Funds. The State Bar of Georgia is considering legislation requiring home loan closing proceeds to be established in IOLTA accounts owned by members in good standing of the State Bar and established in financial institutions doing business in Georgia. GBA will monitor.
Financial Power of Attorney. Legislation may be introduced that will clarify the suggested form in the current code that includes two witnesses signatures does not mean that one of the signatures must be notarized. GBA will monitor.
Lien Priority. Legislation may be introduced intended to give certain contractors or subcontractors superlien priority over a lender’s lien following a foreclosure. GBA will oppose.

New Bills Introduced This Week

Be sure and check the State Issues page of GBA’s website as we add new bills as they’re introduced to our tracking list. Just this week, we added bills related to:
ABLE Accounts. HB 710 by Rep. Scot Turner (R-Holly Springs) and HB 768 by Rep. Lee Hawkins (R-Gainesville) would establish a qualified ABLE program in Georgia so people can contribute to tax-exempt accounts to pay for the qualified expenses such as education, housing and transportation, of eligible individuals with disabilities.

Unauthorized Practice of Law. HB 759 by Rep. Wendell Willard (R-Sandy Springs) clarifies that credit unions have parity with other financial institutions so that loan closings may be done without the use of an attorney in limited situations.

Committee Meetings This Week

GBA staff attends committee meetings as issues are discussed of interest to our members. This week, we attended several:
Ways and Means. Considered a new version of a bill from last session, HB 653 by Rep. Don Parsons (R-Marietta), that would allow a delinquent taxpayer to transfer the execution of delinquency to another party for payment as a loan, which would give the other party priority lien status. GBA is monitoring with concerns.
Also heard in Way and Means was HB 356 by Rep. Ron Stephens (R-Savannah) regarding the titling of boats as described above. There were many questions from committee members of local tax commissioners and the boat dealers. No action was taken. GBA supports the concept.
House and Senate Economic Development Committees. GBA participated in a briefing for members on the importance of the financial technology, payments and cyber security industry in Georgia.

GBA’s Advocacy Team at the Capitol

Led by GBA’s Senior Vice President, Government Relations, Elizabeth Chandler, GBA is at the Capitol every day advocating on behalf of our members. Also at the Capitol are GBA’s government relations consultant Steve Bridges and GBA President and CEO Joe Brannen. If you’re going to be around the Capitol with your local chamber, a leadership group, or bringing someone to page, be sure and let us know as we’d love to visit with you and let you know what’s happening that day. Legislators also like to see their hometown constituents taking an interest in their work and we’ll help you get connected. With questions about GBA legislation, other issues of interest, or anything related to the legislative process, contact Elizabeth at 404.420.2027, Steve at 404.420.2037, or Joe at 404.420.2026.