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Independent Bankers Association of Texas

October 31, 2023

Nationwide Injunction in Place for 1071 Implementation

 

In case you missed it, last week the community banking industry celebrated a major victory as the injunction halting implementation of small business data collection requirements (under Section 1071 of the Dodd-Frank Act) was expanded to all financial institutions nationwide.

 

The expanded injunction came as a result of legal action taken by IBAT, ICBA and Texas First Bank identified in the case as “the community bank intervenors.” The action provided a level playing field to ensure that all banks, not just members of the American Bankers Association (ABA) and the Texas Bankers Association (TBA), were exempt from implementing the rules until the fate of the Consumer Financial Protection Bureau (CFPB) is decided by the Supreme Court next June.

 

If the Supreme Court upholds the funding mechanism of the CFPB, the bureau will then have to issue a new timeline for implementation of the final rules under 1071. If the court rules against the bureau, then it will have to decide what happens to the many rules it has promulgated since it was founded in 2011.

Agencies Go on Overdrive to End the Year

 

Federal regulators are ending the year with a bang, having spent the month of October issuing major proposed and final rules. In recent weeks, we have seen the issuance of:

  • “Open banking” regulations required under Section 1033 of the Dodd-Frank Act – which proposes new requirements for consumer access to financial records;
  • A rewriting of the Community Reinvestment Act, with all banks over $600 million in assets experiencing some changes to how they’re monitored for CRA compliance;
  • Proposed “standards for corporate governance” by the FDIC for banks over $10 billion in assets (and some under $10 billion);
  • Principles for climate related risk for large financial institutions (over $100 billion); and
  • Proposed changes to interchange rules for banks over $10 billion under Regulation II.

While several of these rules are targeted at larger financial institutions, IBAT will be working to identify areas where their effects might trickle down to smaller financial institutions. As we have seen in the past, there are times when regulators’ expectations of compliance precedes formal expansion of applicability to smaller institutions.

 

Please keep a close eye on this newsletter in the weeks ahead, as IBAT will be asking members to participate in the open comment period on several of these rules.

Special Session Drawing to a Close in Austin

 

The Texas legislature is winding down its third special session. Despite strained relationships between the chambers and leadership offices, progress is being made.

 

It appears the ban on private businesses requiring employees and contractors to get the COVID-19 vaccine will pass. In accordance with the mandate ban, the Texas Workforce Commission is responsible for handling complaints against businesses. Violators will be subject to hefty fines and/or lawsuits brought by the state. The legislation passed both the House and Senate and is now headed to a conference committee for fine-tuning before it is submitted to the Governor.

The Governor's border security measures are also looking favorable for passage. Three bills are working through the process and will likely reach his desk:

  • : Creating a new crime for individuals illegally entering Texas from Mexico and empowering law enforcement to apprehend, arrest and send back those caught here illegally;
  • : Appropriating $1.5 billion to build barriers along the Texas-Mexico border; and
  • : Increasing minimum sentences from 2-10 years for knowingly smuggling illegal immigrants and/or operating a stash house for smuggling individuals across the Texas border.

Education Savings Accounts, commonly referred to as vouchers, are not likely to pass. IBAT expects a fourth special session to address this divisive issue, along with several bills vetoed at the end of the regular session.

New House Speaker and Community Banking Legislative Priorities

 

Fourth-term Congressman Mike Johnson (Louisiana) was selected as House Speaker on Wednesday of last week. While policy discussion regarding Johnson’s ascension is primarily focused on forestalling a November 18 government shutdown, Johnson’s voting record offers some early indications on where he stands on some community banking priorities.

 

Notably, Johnson has voted against every major piece of cannabis legislation, including the SAFE Banking Act, which would make it easier for marijuana companies to access financial services. The Senate version of the SAFER Banking Act () was voted out of the Senate Banking Committee in September and enjoys broad bipartisan support. The House version (currently ) has passed the lower chamber multiple times in years past. However, the prospects for similar House passage are changing despite recent Senate movement.

 

Johnson has also aired concerns about the management of the National Flood Insurance Program (NFIP) after a recent rate revamp. Fellow Louisianian and House Majority Leader Steve Scalise has pushed back against rate hikes for years and Johnson could help bolster that effort. Johnson has co-sponsored legislation that would lower the cap on annual premium increases on flood insurance. Additionally, NFIP funding will be impacted if the government is unable to avoid a shutdown.

 

IBAT will continue to provide updates as the policy environment takes shape under the new Speaker.

IBAT's Annual Winter Summit Hotel Deadline Quickly Approaching

 

January 28-30 | Avon, CO

 

IBAT's will return to the beautiful in Avon, Colorado. This unique meeting provides a memorable opportunity for bankers to have face-to-face interaction and invaluable conversations with senior regulators and banking attorneys.

 

If you have not done so already, please be sure to

before the deadline.

 

Discounted guestrooms for the Annual Winter Summit are available for $319/night plus taxes and fees with a reduced resort fee for IBAT conference attendees if booked by Friday, December 22.

 

Registration Fees:

IBAT Member: $795 | Spouse/Guest: $400

 

Contact the for details or if you have any questions.

Join Us Tomorrow - BHB Inside the Numbers

 

Tomorrow, November 1 | 10:00-11:00 a.m. CT | Live Virtual

 

There is still time to register and join (BHB) and fellow community bankers nationwide for its quarterly edition of Inside the Numbers featuring Sean Mayo of FedFis and bank analysts Rick Boals and Alan Smith as they deliver the real story on the state of community banking.

 

Moderated by IBAT President & CEO Christopher Williston VI, this lively conversation will take an inside look at the Q3 call report to promote clarity and understanding of bank performance, year-to-date trends and status of the economy. And in true BHB spirit, expect a mix of serious insights, lively discussion and a dash of humor to keep things interesting.

 

Don't miss your chance to join this exceptional group as they discuss what's really going on within the community bank sector, how community banks are responding to the current climate and what their position indicates about future expectations.

Independent Bankers Association of Texas

1700 Rio Grande St., Ste. 100 | Austin, Texas 78701 | 512.474.6889
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