CFPB Reform Legislation
Senator Ted Cruz and Texas Representative John Ratcliffe (R-TX) have introduced very simple bills that would repeal the section of Dodd-Frank that created the CFPB.
S .370 – A bill to eliminate the Bureau of Consumer Financial protection by repealing title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the Consumer Financial Protection Act of 2010.
H.R. 1031 – To eliminate the Bureau of Consumer Financial Protection by repealing title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Commonly known as the Consumer Financial Protection Act of 2010.
What is the likelihood of either bill becoming law? Not very likely, but always remember, this is a process, and there are several Republicans pulling in the direction of doing as much as possible to clip the wings of CFPB. These bills are symbolic, but they’re part of an effort to do something to reform CFPB.
Community Financial Institution Exemption Act – H.R. 1264
This bill will exempt credit unions and other financial institutions under $50 billion in assets from CFPB rules and oversight. Currently, there are 8 cosponsors. One is Congressman David (Phil) Roe. If your credit union is located in Congressman Roe’s 1st. district please send him a thank you for cosponsoring.
Hopefully this legislation will gain significant support and be included in Chairman Hensarling’s CHOICE Act. Chairman Hensarling announced last week that the House Financial Services Committee would hold a hearing to discuss the Financial CHOICE Act on Wednesday, April 26th.
State Update: Tennessee General Assembly
The only bill of the 1,400 or so filed this year that must pass is the appropriations bill which authorizes the expenditure of state funds beginning July 1, 2017, and running through the state’s fiscal year which ends June 30, 2018. Last week a subcommittee of each body’s finance committee began to sift through each of the three hundred or so amendments that have been filed.
In the Senate, the four-member Appropriations Subcommittee is chaired by John Stevens in a debut role. Senator Stevens (43) is a lawyer from Huntingdon in Carroll County. Senator Stevens will be joined by, Reggie Tate of Shelby County as vice chair, and Majority Leader Mark Norris of Shelby County, and full Finance Committee Chair Bo Watson of Hamilton County.
An addition to the dynamics of last week was Governor Haslam’s proposed fuel tax increase legislation. 25-6 and 60-37. These numbers reflect the vote totals in the Senate and House for Governor Haslam’s fuel tax legislation. Tennessee will continue to be one of only five states that has no highway debt on its books. Senate no votes, all Republican, were Mae Beavers of Wilson County, Janice Bowling of Coffee County, Dolores Gresham of Fayette County, Joey Hensley of Lewis County, Frank Niceley of Jefferson County, and Kerry Roberts of Robertson County. As the vote totals reflect, the Senate led on this Haslam initiative, and the House had a harder time building a consensus. Lead sponsor Barry Doss of Lawrence County, however, rose to the occasion and led the House through about five hours of floor debate and 81 amendments before the final vote was tallied. A notable no vote included House Majority Caucus Leader Ryan Williams of Putnam County, and a notable absence included House Majority Leader Glen Casada of Williamson County. After wandering in a desert of political angst, Speaker Beth Harwell ended up voting for the bill. The Senate added an amendment authorizing additional property tax relief for the disabled veterans, and the House will address that issue on its message calendar on Monday evening, April 24th.
Credit Union Legislation
The following bill passed and is awaiting the Governor’s signature.
SB0357/HB0150 – Increases from $10,000 to $15,000 the aggregate amount that a credit union may pay out of all accounts or contents of safe deposit boxes maintained by a deceased shareholder or depositor. – Amends TCA Title 45.
The change will give credit unions greater flexibility to assist the families of deceased members during difficult times.
SB726/HB535: Uniform Commercial Code – As introduced, creates a streamlined process for certain public officials to contest UCC financing statements that they believe to lack any legal basis. This bill creates an alternative to the demand/termination system under present law by authorizing public officials to file a notarized affidavit in the appropriate filing office that challenges a UCC filing statement in which the public official is named as a debtor. The filing office must provide notice of the affidavit to the secured party. A secured party, who believes in good faith that the filed financing statement was filed with a reasonable basis or legal cause, may file with the filing office a petition for review by an administrative judge pursuant to the contested case procedures of the Uniform Administrative Procedures Act. A petition for review must set forth the factual basis showing that the filed record was filed with a reasonable basis or legal cause, and be accompanied by a cost bond in the amount of $200. An amendment has been filed to exempt financial institutions insured by the NCUA, FDIC, and those regulated by the Farm Credit Administration from the cost bond. The bill is currently behind the budget in both the Senate and House Finance Ways and Means Committee.
Other Bills of Interest:
SB1267 / HB 1064 – The Elderly and Vulnerable Adult Financial Exploitation Prevention Act
As introduced, this bill requires the Department of Financial Institutions to consult with financial service providers, the Tennessee Commission on Aging and Disability, and the Department of Human Services to consider ways in which the entities can collaborate to promote education and awareness of the dangers to vulnerable adults of financial exploitation and financial theft and explore preventative measures that can be taken by vulnerable adults to avoid such dangers. On April 17, 2017, the Senate adopted amendment #1 and passed Senate Bill 1267, as amended.
AMENDMENT #1 rewrites this bill; enacts the Elderly and Vulnerable Adult Financial Exploitation Prevention Act; and revises other provisions related to financial service providers, as discussed below. This amendment defines “elderly adult” as a person 65 years of age or older; and “vulnerable adult” as a person 18 years of age or older who, because of mental or physical dysfunction, is unable to fully manage the person’s own resources, carry out all or a portion of the activities of daily living, or is unable to fully protect against neglect, exploitation, or hazardous or abusive situations without assistance from others.
Under this amendment, if a financial service provider has reasonable cause to suspect that financial exploitation may have occurred, may have been attempted, or is being attempted, the financial service provider may, but is not required to, refuse a financial transaction or delay a financial transaction on an account: (1) Of the elderly or vulnerable adult; (2) On which the elderly or vulnerable adult is a beneficiary, including a trust, guardianship, or conservatorship account; or (3) Of a person suspected of perpetrating financial exploitation. This amendment authorizes the financial service provider to also refuse a financial transaction or delay a financial transaction if the department of human services or a law enforcement agency provides information to the financial service provider demonstrating that it is reasonable to believe that financial exploitation may have occurred, may have been attempted, or is being attempted. Except as ordered by a court, a financial service provider will not be required to refuse a financial transaction or delay a financial transaction when provided with information by the department of human services or a law enforcement agency alleging that financial exploitation may have occurred, may have been attempted, or is being attempted, but may use its discretion to determine whether to refuse a financial transaction or hold a financial transaction based on the information available to the financial service provider. This amendment requires a financial service provider that refuses a financial transaction or holds a financial transaction based on reasonable cause to suspect that financial exploitation may have occurred, may have been attempted, or is being attempted, to: (1) Except with regard to an account administered by a bank or trust company in a fiduciary capacity, make a reasonable effort to notify one or more parties authorized to transact business on the account orally or in writing. No notice under this section shall be required to be provided to any party authorized to conduct business on the account if the party is the suspected perpetrator of financial exploitation; and (2) Report the incident, if it involves financial exploitation, to the department of human services adult protective services division. This amendment establishes the time periods for which such a refusal by a financial service provider to conduct a financial transaction or hold a financial transaction based on the financial service provider’s reasonable cause to suspect that financial exploitation may have occurred, may have been attempted, and provides for the provider or a court order extending the time period, depending on the circumstances as discussed in detail in the amendment. This amendment grants immunity to a financial service provider, or an employee of a financial service provider, from all criminal, civil, and administrative liability: (1) For refusing or not refusing a financial transaction, or holding or not holding a financial transaction under this section; or (2) For actions taken in furtherance of the determination, if the determination was based upon a reasonable belief. This amendment authorizes a financial service provider to offer to an elderly or vulnerable adult the opportunity to submit and periodically update a list of persons that the elderly or vulnerable adult authorizes the financial service provider to contact when the financial service provider has reasonable cause to suspect that the adult is a victim or a target of financial exploitation. A financial service provider, or an officer or employee of the financial service provider, that has reasonable cause to suspect that an elderly or vulnerable adult is the victim or target of financial exploitation may convey the suspicion to one or more of the following, provided that the person is not the suspected perpetrator: (1) Persons on the list, if a list has been provided by the elderly or vulnerable adult; (2) A co-owner, additional authorized signatory, or beneficiary on the elderly or vulnerable adult’s account; or (3) A person known by the financial service provider to be a family member, including a parent, adult child, or sibling. The financial service provider may choose not to contact one or more persons on the list if the financial service provider suspects that the person or persons are engaged in financial exploitation. A financial service provider, or an employee of a financial service provider, will be immune from all criminal, civil, and administrative liability for contacting a person or electing not to contact a person under this section and for actions taken in furtherance of that determination if the determination was made based on reasonable belief. Contact with any person, and any information provided under the above provisions will be exempt from the customer consent and customer notice provisions of present law. Also, this amendment authorizes a financial service provider to refuse to accept an acknowledged power of attorney if the financial service provider has reasonable cause to suspect that the principal is or may be the victim or target of financial exploitation by the agent or person acting for or with the agent. A financial service provider, or an employee of a financial service provider, will be immune from all criminal, civil, and administrative liability for refusing to accept a power of attorney or for accepting a power of attorney and for actions taken in furtherance of that determination if the determination was based upon reasonable belief.
Under present law, the Financial Records Privacy Act provides that a financial institution may furnish information or records to a federal, state or local official or agency in response to a subpoena lawfully issued by the official or agency. Present law provides that a financial institution may presume that a subpoena that appears valid on its face has been lawfully issued. This amendment revises this presumption to add that it apples if the subpoena shows on its face that it is in compliance with notice and delay provisions of present law or administrative subpoena issued by the department of human services pursuant present law. This amendment requires a financial institution to provide access to or copies of records that are relevant to suspected actual or attempted financial exploitation, as described above, in response to an administrative subpoena issued by the department of human services, adult protective services. The records requested must be limited to historical records as well as records relating to the most recent transaction or transactions that may comprise financial exploitation not to exceed 30 calendar days prior to the first transaction that was reported, or 30 calendar days after the last transaction that was reported. A financial institution will have up to 14 business days to respond to an administrative subpoena. The department of human services must provide notice to the customer whose records are requested not later than 30 days after receipt of the records from the financial institution. However, the department may delay the notice to the customer by seeking a judicial delay. Under present law, in all judicial proceedings, the reasonable expenses of a financial institution in producing records in response to a subpoena are taxed as costs, without regard to the amount of any bond, and in all other instances, the issuer must pay the financial institution’s reasonable expenses incurred in complying with the subpoena. Present law provides that charges by the financial institution at rates that do not exceed those established by the internal revenue service are deemed reasonable unless otherwise determined by the appropriate court after notice and a hearing. This amendment adds that charges established by the financial institution’s published fee schedule will also be deemed reasonable. Under present law, a bank initiating an interpleader action is entitled to recover from the funds tendered the costs of the action, including reasonable attorneys’ fees. This amendment extends this provision to a bank “joining in, joined on, or defending in any manner” an interpleader action. This amendment encourages the department of financial institutions, within existing public or private resources, to consult with financial service providers, the commission on aging and disability, and the department of human services to consider distributing public education and information to alert the public to the dangers posed to elderly and vulnerable adults by financial exploitation. This bill was signed by the Senate Speaker on April 24th and is being prepared to be sent to the Governor for his signature, once signed, this act shall take effect on July 1, 2017. This bill as amended will be repealed on June 30, 2022. This new statute will be a valuable tool for all financial institutions across the state to help identify and deter possible financial exploitation of our vulnerable citizens.
SB794 / HB 464 PACE – Property Assessed Clean Energy Act
This bill authorizes local governments to establish a property assessed clean energy (PACE) program to provide financing for a qualified project to an owner of commercial, industrial, or residential real property. A “qualified project” is the installation or modification of a permanent improvement fixed to real property and intended to decrease or offset water or energy consumption or demand and includes the installation or modification of a product, device, or interacting group of products or devices that use energy technology to generate electricity, provide thermal energy, regulate temperature, or increase energy efficiency. Under this bill, a local government may designate a region within its jurisdiction in which the government may enter into a written agreement with a property owner of record in order to provide financing to the owner for a qualified project. Financing provided pursuant to this bill may be used for certain expenses specified by this bill, including materials, labor, and permit fees. The owner’s property will be assessed pursuant to the PACE agreement in order to repay the financing provided for the qualified project. This bill has been assigned to the general subcommittee of the Senate Energy, Agriculture and Natural Resources Committee. The House companion bill has been deferred to summer study in the Agriculture and Natural Resources Subcommittee.
This is a brief recap of the many bills your League’s Governmental Affairs team has monitored and worked on during this legislative session. With the April 28th adjournment goal being pushed back, it looks like the adjournment date for the 110th General Assembly could be May 5th or May 12, 2017. If you have questions regarding any of the bills mentioned here, please feel free to contact me.
Sheila Franklin, V.P.
Tennessee Credit Union League