A spate of banking laws that took effect New Year's Day include an Indiana predatory-lending law that exempts banks and could lead to similar statutes elsewhere.
Amber Van Til, the director of governmental relations at the Community Bankers Association of Indiana, said bank lobbyists in several states have requested copies of the Indiana law.
"Congress members are also looking at the Indiana law as a model for federal legislation, because almost all of the other state laws have been overreaching," Ms. Van Til said in an interview Wednesday.
Payday lending was another hot-button issue in 2004, along with nonbanks' unauthorized use of bank brands.
"That's a comer - bank-name fraud is a real problem that people need to address," said Mathew Street, the American Bankers Association's general counsel on state legislative issues.
California and Missouri joined three other states in 2004 in passing laws that allow state regulators to issue cease-and-desist orders to nonbanks that pose as banks in mailings pitching insurance products or mortgage refinancing.
These impostors usually get names and mortgage information from public records, then send mailings that appear to be from the banks where the recipients have their mortgage. Banks in these states pushed for the laws because too many upset customers were under the impression that the banks had sold their information to the nonbanks.
California's law went into effect Saturday and Missouri's took effect in August. Mr. Street said he expects more states to pass similar laws in 2005; the Oregon Bankers Association is considering whether to lobby its state legislators about the issue next year.
The Indiana Homeowner Protection Act is the first anti-predatory-lending law that specifically exempts banks and credit unions. It covers loans made by mortgage brokers and consumer finance companies, protects borrowers from practices such as balloon payments, and limits the points and fees lenders can charge.
Bank lobbyists called the law a major victory for the state's financial institutions.
Predatory-lending laws enacted in other states prohibit legitimate lenders from offering loans to subprime borrowers who have had credit trouble, or make it very difficult to do so. Indiana bankers convinced their legislators that banks and thrifts should be exempt, since they are already subject to state and federal laws that let borrowers seek remedies from regulators if they have had a problem with a particular bank or thrift.
The country's strictest law against payday lending went into effect in May in Georgia. It requires all payday lenders doing business in the state to be licensed as industrial loan companies, thus forcing them to obey state usury laws.
Payday lenders said the law would force them to stop making loans in Georgia. But a Macon newspaper reported in August that although some payday lenders appeared to have gone out of business, payday loans at triple-digit interest rates were still being made in parts of the state.
Gift cards got more attention in 2004, the ABA's Mr. Street said. Ten states, including Washington, whose law went into effect in June, have either abolished or established limits on the amount of fees a bank or retailer can charge on gift cards. Bank issuers have generally said that dormancy fees - penalties for not using a card for a set period - are necessary to help pay for the cost to maintain the accounts, even if the cards are all but forgotten by consumers.
These laws also prohibit banks and retailers from putting expiration dates on gift cards, or put certain conditions on expiration dates. For example, under Iowa's law, which took effect in July, banks and retailers retain the right to set expiration dates on gift cards and certificates, but after three years they must turn over the cash from unused cards and certificates to the state as unclaimed property.
Outsourcing was widely discussed in statehouses last year. Mr. Street said at least 180 bills introduced in 38 states attempted to prevent states or their vendors - including banks that accept state deposits - from sending jobs overseas. Most of the bills were either killed or vetoed by governors, he said.
"The power of market forces prevailed, and the laws that did get passed have very little or no effect on banks," Mr. Street said. Five states enacted laws that either established state preferences for working with vendors that do not outsource, or merely encourage businesses in the state not to outsource - but none of the laws prohibit the practice.
It was relatively quiet year for battles between credit unions and banks, Mr. Street said. In April, Vermont legislators tabled a bill to give state-chartered credit unions there the same powers as federally chartered ones, but they are expected to revisit the issue in 2005.
Vermont bankers have been considering pushing for an amendment to any bill that would end credit unions' tax-exempt status. Similar proposals were introduced in Iowa, Oregon, Utah, and New Mexico in 2003 but were defeated.
In California bankers endorsed Proposition 64, which aimed to reform the state's laws on unfair business competition and to minimize frivolous "shakedown" suits by private lawyers.
The proposition passed by 59% of the vote on Nov. 2 and took effect the next day. A company doing business in California can now be sued for unfair business practices only if someone has been injured and suffered financial or property loss as a result. If a lawyer filed a lawsuit on behalf of others claiming unfair business practices, the claim would have to meet standard class-action requirements.
Under California's earlier laws, private lawyers and public prosecutors could sue companies on behalf of the general public. But the initiative's proponents said that some private lawyers were filing or threatening to file lawsuits over "technical errors" that had misled no one and caused no damage.
For example, in 2003 a law firm threatened to sue a California bank over a newspaper advertisement for car loans. The bank was accused of misleading the public by printing the interest rate in smaller type than the rest of the ad. No one claimed to have been harmed by ad, but the bank paid several thousand dollars to the law firm so that it would not file the suit.
In Arizona, bankers lost their fight against Proposition 200, which denies all government services (except federally mandated emergency services) to undocumented immigrants. Bankers' concern was that the broadly worded initiative would scare even legal immigrants from seeking banking services.
The proposition passed on Nov. 2, with 56% of the vote. On Nov. 30, U.S. District Judge David C. Bury in Tucson placed a restraining order to prevent the proposition from becoming law. But he lifted the order on Dec. 22 and the law took effect the next day.
