January 22, 2016

GBA’s Priority Bills Introduced

The General Assembly was in session Wednesday through Friday this week with Friday marking the legislators’ eighth day of the forty-day session. The Legislature will be in session Monday through Thursday next week and has voted on an adjournment resolution calling for March 24 as the end date for the biennial. Our two priority bills were introduced this week. Our two priority bills were introduced this week.
Multibank Collateral Pledging Pool. Our thanks to Sen. John Kennedy (R-Macon) and a long list of other senators who introduced legislation, SB 283, we’re requesting that will create a new collateral pledging option for banks holding public deposits. In developing the concept behind the bill, we’ve coordinated with the State Treasurer and the Department of Banking and Finance who both will be involved in overseeing the pool by the State Depository Board. Here are the principal components on how the concept will work:
  • Adds a third public deposit collateralization option for all banks under $50 billion that are qualified to be a state depository (the three options will be the dedicated method, the bank-level pool method, and the new multibank contingent liability pool method)
  • Banks over $50 billion in assets will be required to participate in the multibank pool; the dedicated and bank-level pool options will be closed to those banks after a transition period (there are currently 10 banks that size operating in Georgia holding approximately 63 percent of all public deposits)
  • All banks participating in the multibank pool will guarantee public depositors against losses caused by the failure of any participant
  • In return for the cross-guarantee, pledging levels for multibank pool will range from 25 to 125 percent
  • Any bank having deposits representing more than 20 percent of the total pool will pledge 100 percent for their deposits over the 20 percent
  • The State Depository Board will develop the policies and procedures for the multibank pool
  • The Banking Commissioner will recommend to the Board the pledging percentages based on the health of the bank (for example, in a similar pooled concept in Florida, the collateralization percentages are 25/50/125)
  • The collateralization percentage will be based on the health of the bank using one or more nationally recognized bank rating services, like SNL Financial
  • The State Depository Board can raise the percent collateralization for any one or for all banks in the multibank pool to a maximum of 125 percent if economic conditions warrant
  • The participating banks will pay for the administration similar to how they’re paying now for the bank-level pool.
The bill is being assigned to the Senate Banking and Financial Institutions Committee chaired by Sen. Burt Jones (R-Jackson), and we expect a hearing next week.
Banking Department Housekeeping Bill. Our thanks to Rep. Bruce Williamson (R-Monroe) and a number of other House members who joined together to introduce the Banking Department’s annual housekeeping bill HB 811 on Friday. Much of the bill was the work product of the public-private Code Review Task Force chaired by Brad Miller, United Community Bank, Blairsville, and made up of members of the GBA’s Bank Counsel Section and senior department staff with Deputy Commissioner for Legal and Consumer Affairs, Bo Fears, serving as scrivener. 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 in 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. The bill is being assigned to the House Banks and Banking Committee chaired by Rep. Greg Morris (R-Vidalia).

Other Bills Introduced This Week

We add bills daily to our tracking list as they’re introduced throughout the session. Be sure and watch the State Issues page on our website for updates. This week we added several bills.
Banks Serving Firearms Dealers. Sen. Jesse Stone (R-Waynesboro) introduced the Georgia Firearms Industry Nondiscrimination Act, SB 282, along with 14 of his senate colleagues. The bill prohibits the discriminatory refusal to provide credit or financial services to persons engaged in the lawful commerce of firearms or ammunition products and their trade associations. In speaking with Sen. Stone, he said the bill was introduced in response to Operation Choke Point that was interpreted by the firearms industry as the federal government’s attempt to shut off credit and deposit services to the industry. The bill essentially means that there has to be a reason other than the fact that the business is selling firearms for the relationship to be affected. We are unaware of any banks refusing to do business with firearms dealers, so please let us know if you have specific examples. We understand the federal regulators once included pawn shops among the businesses creating a high risk of consumer fraud and that resulted in a higher risk of compliance for their financial institution. Therefore those relationships were severed in certain instances. Some pawn shops also sell firearms and because the bill states the decision to not serve a dealer cannot be made solely on the fact that firearms are being sold, we expect those decisions may be revisited if the bill passes. Pawn shops weren’t the only businesses singled out by the Feds. Payday lenders, check cashers, porn shops and other businesses were highlighted since they bring the bank significant compliance risks and costs mostly related to the federal Bank Secrecy Act and the Anti Money Laundering Act. Statutes like the one proposed here obviously create a federal-state tension. A violation of the Act comes with a $10,000 penalty through a new private right of action created in the bill. The bill has been assigned to the Senate Banking and Financial Institutions Committee.
ABA Chairman Dan Blanton Recognized. Reps. Barbara Sims (R-Augusta), Greg Morris (R-Vidalia) and Chuck Williams (R-Watkinsville) introduced a nice resolution, HR 1073, this week honoring former GBA Chairman Dan Blanton for his long service to the banking industry and as the current chairman of the American Bankers Association. Congratulations, Dan!
Data Breach Notification Bill Introduced. Sen. John Albers (R-Roswell) introduced SB 276 this week requiring certain businesses and government agencies to notify affected individuals within 72 hours of a data breach. Our initial concerns that the bill would create a new compliance burden for banks appears to have been addressed in the bill as state or federally regulated businesses that are already required to have data breach protocols in place will be deemed to have already complied with the new notification standard for businesses not already covered.
529 Savings Account Tax Deduction Increase. Rep. Sam Teasley (R-Marietta) introduced HB 802 which if passed will increase the tax deduction for joint return filers for annual contributions to 529 college savings plans from $2,000 to $4,000.

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.