December 22, 2023

Missouri Legislative Session Begins Jan. 3

The holidays are upon us, and so is the 2024 Missouri state legislative session. The House and Senate will gavel in Wednesday, Jan 3.

Several bills supported by MBA have been pre-filed, including an increase to the cap for MOBUCK$ (from $800M to $1.2B) and a provision to allow financial institutions to pass the cost of credit reports for consumer loans to customers.

The MOBUCK$ application portal closed in May because of a sharp increase in demand for linked deposits. Although the program is set to reopen Jan. 2, demand for the program remains high, and the cap is likely to be reached again without a legislative change. MBA thanks Sen. Sandy Crawford, R-Buffalo, and Rep. Terry Thompson, R-Lexington, for pre-filing this very important piece of legislation.

Crawford also sponsored a provision to allow financial institutions to pass the cost of credit reports for consumer loans to customers. The cost of credit reports has increased dramatically throughout the last several years. Allowing banks to recoup this cost — just as they are allowed to do for residential and commercial loans — will help support their ability to continue offering consumer loans.

“These are just a few measures we’ll be pursuing for our members this session,” said MBA Senior Vice President David Kent. “As always, we encourage our members to join us at the Capitol to help advocate on these important issues with your legislators.”

MBA’s Target Banker program begins in February and concludes in April.

“Our Target Banker visits makes it easy for bankers to schedule a day at the Capitol to learn about key banking bills and advocate on behalf of your bank with the support of our staff,” said MBA Vice President Emily Lewis.

Both Kent and Lewis said every legislative session is different and presents various challenges, but the 2024 session could be one of the most difficult in recent memory. The former Conservative Caucus, which disbanded in 2022, has now rebranded to the Freedom Caucus. This will likely lead to more Republican infighting as the Senate leadership’s priorities may differ from Freedom Caucus’ priorities. Add in the element of being an election year, with at least a dozen sitting lawmakers running for higher office — some of whom will face their colleagues on the ballot — will make it difficult to move even legislation with widespread support.

“Regardless of what this session may bring, we will pursue every opportunity to pass positive legislation and work diligently against harmful legislation,” Kent said. “We will be in the Capitol every day, working for the best possible outcomes for your banks and your customers.”

ABA Wants FSOC Study From Biden To Prevent Harm From Regulatory ‘Tsunami’

MBA fully endorses the American Bankers Association asking President Biden to direct Treasury Secretary Janet Yellen, in her capacity as chairwoman of the Financial Stability Oversight Council, “to complete a comprehensive interagency economic impact analysis of the various rule changes that are taking place in siloes across your administration before any new regulations can take effect.”

In a letter to Biden, ABA President and CEO Rob Nichols warned that the large number of regulatory initiatives currently under consideration by banking regulators will have a chilling effect on the financial sector and broader U.S. economy, resulting in further tightening of credit, higher prices for banking services and more bank consolidation. Among these numerous and largely uncoordinated policy initiatives are the following.

• new capital regulations
• a 1,500-page rewrite of the Community Reinvestment Act rules
• payment rules on transaction routing and business-to-business payment caps
• rulemaking on small business lending data reporting
• a rehaul of the Federal Home Loan Bank system
• proposed revisions of rules for bank custody businesses

Nichols said implementing any of the rules on their own would be a significant challenge for banks, but together they mean banks of all sizes will face higher costs for deposits, making loans, running basic payment programs and implementing cybersecurity and other critical systems.

“Bankers have been vocal with both lawmakers and regulators about the ramifications of these rules for their customers,” said MBA President and CEO Jackson Hataway. “We support ABA’s efforts to have the Biden administration fully review and examine the economic impact and complexity of these regulations.”

Nichols told the president that “if preserving the dynamic, diverse U.S. banking system remains a priority for the nation and access to affordable banking services for every American a table-stakes imperative, I encourage you to ask tough questions about the regulatory tsunami now forming and whether it is consistent with your goals to increase economic growth and expand opportunities for all Americans.”

Biden Vetoes Bipartisan Resolution to Overturn CFPB 1071 Rule

As expected, President Biden has vetoed a bipartisan measure that would have overturned the expansion of Section 1071 reporting requirements by the Consumer Financial Protection Bureau. Senate Joint Resolution 32 nullified the CFPB’s final rule implementing Section 1071 of the Dodd-Frank Act, which requires the collection and reporting of credit application data for small businesses, including women-owned and minority-owned small businesses.   

“It is incredibly disappointing that the Biden administration failed to understand the importance of this bipartisan resolution for small businesses,” said MBA President and CEO Jackson Hataway. “The president’s veto shows complete disregard for what is a clear and compelling congressional statement on the rogue actions of the CFPB. The true impact of the CFPB’s 1071 rule will be felt when access to credit becomes more difficult for small businesses or when businesses leave the regulated financial system entirely to avoid overly intrusive government information requirements.”

This latest action by the president furthers the banking industry’s resolve to challenge 1071’s final rule and the CFPB expanding its regulatory authority. MBA fully supports the lawsuit from the Texas Bankers Association and the American Bankers Association against the 1071 rule and a similar lawsuit against the CFPB from the Kentucky Bankers Association. As previously shared by MBA, a Texas court expanded a preliminary injunction on enforcement of 1071 as the U.S. Supreme Court hears a constitutional challenge to the CFPB’s funding structure in a separate case. The court could possibly issue a ruling before June 2024.

ABA, State Bankers Associations Urge Open Process For FHLB Reforms

MBA joined the American Bankers Association and state bankers associations in urging the Federal Housing Finance Agency to be transparent and inclusive as it moves forward with implementing the recommendations in its review of the Federal Home Loan Bank system.

FHFA’s review proposed several steps to enhance FHLB’s liquidity mission and expand its housing and community development focus. Some of the recommendations, such as doubling the statutory minimum for the FHLBs’ affordable housing programs, require acts of Congress. In their letter, the associations urged FHFA to follow the Administrative Procedure Act’s public notice-and-comment process when proposing any changes under its purview. They also strongly discouraged the use of agency guidance, supervisory letters or changes made through the examination process to implement any of the recommendations, “as those avenues do not provide [FHLB] members with adequate opportunities for input or understanding before changes are made.”

“The proposals set forth can dramatically impact that mission and the continued ability of the FHLBs to meet it for all members,” the associations said. “In the wake of the recent report, a number of observers have speculated that implementation of the recommendations could result in more limited or more difficult access to the FHLBs liquidity and programs creating uncertainty in the market. FHFA can reduce that uncertainty by committing to a clear, transparent, open and inclusive process going forward. We ask that you do so, and state as such publicly.”

Lawmakers Seek Delay For Beneficial Ownership Reporting Implementation

Reps. Sam Graves, Blaine Luetkemeyer and Ann Wagner are among more than 80 House and Senate lawmakers urging the Treasury Department and Financial Crimes Enforcement Network to delay all beneficial ownership information reporting requirements by at least one year and until the agency finalizes all outstanding rulemakings. The requirements are currently set to go into effect Jan. 1.

In a joint letter, the lawmakers said FinCEN is “woefully behind” in educating small business owners and stakeholders about new obligations under the Corporate Transparency Act. They cited a National Federation of Independent Business survey that found 90% of respondents were entirely unfamiliar with the reporting requirements and said “this lack of awareness and education is alarming and must be addressed before the law is implemented.”

The lawmakers further noted that FinCEN has not finalized two final rulemakings concerning BOI database access and customer due diligence. “We believe a year’s delay will provide FinCEN and the business community with more time to educate owners of their new obligations,” they said. “It will also give FinCEN time to review the new rules and improve and finalize the statute’s regulatory framework.”

MBA thanks Reps. Graves, Luetkemeyer and Wagner for their support to delay reporting requirements.

FinCEN Issues Final Rules Regarding Access To BOI Information

The Financial Crimes Enforcement Network issued final rules regarding access by authorized recipients to beneficial ownership information that will be reported to FinCEN pursuant to the Corporate Transparency Act. The regulations implement the strict protocols required by the act to protect sensitive personally identifiable information and establish the circumstances in which specified recipients have access to BOI. This rule (a new 31 CFR 1010.955), published in today’s issue of the Federal Register, is effective Feb. 20, 2024. Table 6 and the subsequent paragraphs of the preamble summarize the access requirements for financial institutions.

Under the rule, accessing BOI is not currently mandatory. Therefore, the rule will not impose requirements in the strictest sense. FinCEN anticipates considering whether to require financial institutions to access BOI reported to FinCEN in the future, potentially as part of its revisions to the 2016 customer due diligence rule. FinCEN and the bank regulatory agencies issued an interagency statement to that effect.

For questions about this rule, please contact MBA Senior Vice President Carol Barnett.