7 State Banking Bills That Matter to the Industry
April 1, 2013 10:30 AM
Washington's public policy battles continue to dominate the spotlight, but important skirmishes are also playing out in state capitals. Here's a look at important banking-related bills that have been introduced in state legislatures this year, including some that have already been passed or defeated. (Image: Thinkstock)
Kansas Raises Cap on Mortgage Rates
Kansas is one of the few states that caps mortgage interest rates. At 1.5 percentage points above the Freddie Mac floating rate, its cap is by far the nation's lowest. Bankers there got a scare last year when the Freddie rate briefly fell so low that they couldn't sell their loans on the secondary market. They mounted a campaign to raise the cap to 3.5 percentage points above the Freddie rate and succeeded. The bill easily passed both houses of the legislature and awaits Gov. Sam Brownback's signature. (Image: Bloomberg News)
Payday Comeback?
Two states that restrict storefront payday lending are now reconsidering. Behind the potential policy shift are concerns that consumers are flocking to unregulated online payday lenders that don't pay in-state taxes. In North Carolina, a bill to reverse an outright ban on payday lending is pending, although the measure was dealt a blow when Republican Gov. Pat McCrory raised concerns . In Washington state, a bill to expand payday lending - which has been restricted since 2009 -- has passed the state Senate. Consumer groups oppose both bills.
Banning Surcharges Before They Happen
As part of a proposed legal settlement , Visa (NYSE:V) and MasterCard (MA) have begun allowing merchants to impose surcharges on credit card transactions. The surcharges have not caught on in any meaningful way, probably because merchants fear that new fees at the cash register would lead to a customer exodus. Still, the prospect of retailers adding surcharges on top of swipe fees has spurred lawmakers in 18 states to introduce legislation that would ban the practice. (Ten states already prohibit surcharges.) The measure has progressed furthest in Utah, having passed both houses of the state legislature. Gov. Gary Herbert faces an April 3 deadline to sign the measure into law. (Image: Bloomberg News)
Golden State Tax Relief
A law expired in January that had exempted from tax payments consumers who had mortgage debt forgiven via a short sale or loan modification. Pending legislation would extend the sunset date to Jan. 1, 2014. The California Bankers Association supports the measure. (Image: Thinkstock)
An Unsuccessful Bid to Ban Dual Tracking
A bill to prohibit lenders from modifying a borrower's mortgage while proceeding with a foreclosure stalled in committee over a host of technical issues, according to the Minnesota Bankers Association. Among those snags was the question of how the bill would square with the Consumer Financial Protection Bureau's proposed rule prohibiting the practice , known as dual tracking. (Image: Thinkstock)
Dragging Out Foreclosures in New York
In New York, lawmakers have proposed legislation that would require attorneys to take several additional steps before initiating a foreclosure - an unwelcome development for bankers in a state where foreclosures can already take 900 days to complete. The New York Bankers Association opposes the measure "because it places onerous, ambiguous and potentially conflicting requirements on plaintiff's counsel, which will only further delay New York's foreclosure process." (Image: Thinkstock)
North Dakota Envy
In at least six states, bills were proposed to create, or study the idea of creating, state-owned banks modeled after the Bank of North Dakota, the nation's only state-owned bank. In New Hampshire and Montana, legislation died in committee. Bills remain (barely) alive in Illinois, Maryland, New York and North Carolina. Similar bills were proposed in roughly a dozen states last year, although all ultimately stalled or were defeated. "It's a remarkable concept, until you look at the cost of creating and administering [a state-owned bank]," says Mathew Street, deputy general counsel for state relations at the American Bankers Association. "It's a big deal at a time when states are whacking budgets."
