#2021-27 November 1, 2021

Financial Services Committee Holds Public Hearing on Public Bank, Credit Union Legislation & Other Banking Bills

Last week, the Joint Committee on Financial Services held what is expected to be its only public hearing on banking related bills this session hearing testimony on 49 bills, including the several bills seeking to establish a public bank (H 1223, S 665 & S 682), the Association’s “mini-mod” legislation (H 1052), authority for credit unions to receive public deposits (H 1213) and other expanded credit union powers.  Other bills on the Committee’s agenda included legislation establishing a foreclosure mediation program, bills seeking to expand the powers of the Massachusetts Share Insurance Corporation (MSIC) and various measures exploring collateralization of public deposits and capping bank fees.

MBA staff testified in strong support of H 1052, which makes several changes to banking law.  These include clarifying that insured cash sweep products can be used to insure public deposits at banks; expanding the prohibition on the illegal use of a bank’s name; prohibiting core processors from including excessive penalties in service contracts; and adoption of the Uniform Real Property Electronic Recording Act (URPERA) in Massachusetts.  In addition, the Association commented on more than 20 other bills, including voicing our concerns and opposition to several measures that would establish a public bank; legislation seeking to expand credit union powers to accept public deposits and to merge with or buy a bank; and bills mandating foreclosure mediation and burdensome ATM security requirements.  Executive Vice President, Jon Skarin, testified virtually in opposition to these bills on behalf of the Association.

The Association also submitted testimony in support of H 1159, a bill filed on behalf of the Association to establish a statutory process governing credit union membership eligibility and ensuring that state-chartered credit unions in the Commonwealth focus on their traditional mission.  MBA’s testimony focused on the major areas of the bill: strengthening the historical role of the member-owners at the annual meeting and in certain transactions; modernizing member voting abilities in the Commonwealth’s largest credit unions; and mandating that state-chartered credit unions be subject to a CRA investment test for all geographic areas from which it takes deposits from members based on their eligibility of living in a by-law included community.

To read all of MBA’s testimony from the hearing, click here.

House Debates ARPA Legislation; Considers more than 1,100 Amendments

Before the vote on final passage, the House measure grew by approximately $174 million making the total outlay approximately $3.87 billion.  The bill passed the House unanimously, and now moves to the Senate for consideration.

In total, the 1,126 amendments would have added an additional $5.8 billion to the bill – far more than the total ARPA funding and budget surplus.  Similar to how the chamber handles the annual budget debate, House leaders worked through consolidated amendments in several categories that limited the number of votes taken while ensuring that all amendments received some consideration.  Consolidated amendments included ones addressing housing and food security, health and human services and education, the environment and climate infrastructure, and workforce and economic development.

The House last week considered a bill, H 4219, to spend a significant portion of the federal relief funds provided to the Commonwealth through the American Rescue Plan Act (ARPA) as well as surplus tax revenue from FY2021.  House members filed more than 1,100 amendments, which were considered during the debate last Thursday and Friday.

State’s Economic Growth Slows from Delta Variant & Inflation

For the fourth quarter of 2021 and first quarter of 2022, MassBenchmarks analysts said it expects the Massachusetts economy to grow at a 4.5 percent annual rate, less optimistic than they were this summer but “consistent with continued gradual progress in getting back to normal and assuming there is no seasonal COVID-19 surge as temperatures drop.”

Tax collections remain strong, with the Massachusetts Department of Revenue reporting that it collected $8.751 billion during the third quarter of 2021.  This is $1.501 billion or 20.7 percent greater than actual collections during the same period of fiscal 2021 and $525 million or 6.4 percent above the administration’s benchmark for the three months of July, August, and September.

Spending that is subject to the state’s sales tax or motor vehicle sales tax declined at a 5.8 percent annual rate in the third quarter after having climbed by a 40.3 percent annual rate in the second quarter of the year.  Jobs in Massachusetts grew at a 6.9 percent annual rate in the third quarter as compared to a 4.3 percent annual rate in the second quarter with employment growing by 6.2 percent in the Commonwealth versus a 4.6 percent growth rate nationally.  Despite the job growth, the state’s unemployment rate climbed slightly from 4.9 percent in June to 5.2 percent in September.

The latest economic analysis from MassBenchmarks showed that growth in the Massachusetts economy slowed significantly during the third quarter and the outlook for the next six months is less optimistic than it was previously as the Delta variant persists and consumer spending slows.  According to the study, the state’s real gross domestic product increased at a 2 percent annualized rate in the third quarter, matching the national growth rate for the same period but down significantly from growth rates of 6.1 percent in the first quarter and 8 percent in the second quarter.