#2023-9, April 28, 2023

GOP-Controlled House of Representatives Passes Symbolic Debt Ceiling Bill

House Speaker Kevin McCarthy (R – CA) passed a difficult test this week by moving a bill through the GOP-controlled House of Representatives along party lines that would raise the debt ceiling by approximately $1.5T.  To garner support within his own conference, though, Speaker McCarthy included specific spending cuts that are unlikely to attract the interest of Democratic colleagues in the Senate as well as the White House.  Over time, if this law were enacted as passed by the House, the Congressional Budget Office (CBO) estimates that it would shave approximately $4.8T off the national debt.

As you know, the Treasury department has been enacting so-called “extraordinary measures” to pay the United States’ bills since the nation exceeded the debt limit in January.  The bill is ultimately designed to hike pressure on the President to get more involved in the protracted negotiation process playing out in Congress.  So far, the President has refused to accept any Republican conditions that would touch the legislative agenda Democrats carried out with their control of both the House and Senate in the prior two years.

The full Congress and White House must pass legislation by early summer that lifts the debt ceiling or else the country would enter uncharted waters economically.

To read the “Limit, Save, Grow” Act, please click here.

MBA Supports Re-Introduction of the SAFE Banking Act

The SAFE Banking Act was re-introduced this week in both the House and Senate.  This bill, championed by state and national banking associations alike, will positively address the existing conflict and between and state and federal laws as they are applied to cannabis and financial services.  The bill has passed the House in several prior Congresses.  It was introduced in a bipartisan fashion by Representatives Dave Joyce (R – OH) and Earl Blumenauer (D – OR) for the House, and Senators Steve Daines (R – MT) and Jeff Merkley (D – OR).

Senator Merkley released the following statement after the bill was introduced: “For the first time, we have a path for SAFE Banking to move through the Senate Banking Committee and get a vote on the floor of the Senate.  Let’s make 2023 the year that we get this bill signed into law so we can ensure that all legal cannabis businesses have access to the financial services they need to help keep their employees, their businesses, and their communities safe.”

As indicated above, the bill has important implications for public safety and financial transparency.  The Massachusetts Bankers Association urges that this legislation receive the full consideration of Congress without delay.

Bill text for the SAFE Banking Act can be read here.

FDIC Releases FIL on Overdraft Fees and APSN Transactions

The Federal Deposit Insurance Corporation issued supervisory guidance (also known as Financial Institution Letter or “FIL”) to financial institutions to raise awareness of the consumer compliance risks associated with assessing overdraft fees on a transaction that was authorized against a positive balance but settled against a negative balance (APSN transactions).

Highlights of the FIL include discussion on FDIC concerns with the available and ledger balance methods used by institutions when assessing overdraft fees, the need to balance complex payment systems management with consumer protection, and the need for banks and financial institutions to review practices regarding the charging of overdraft fees on APSN transactions that consumers may not anticipate or avoid.

The Association is digesting this limited FIL and will have more to report in the ensuing weeks.  As we have discussed with the FDIC and prudential regulators at large, community banks already work internally and externally with third party providers to ensure that overdraft programs are compliant with all applicable laws and regulations.

To read about the FIL, please click here.

Federal Reserve Board Review of Silicon Valley Bank Report Release

The Federal Reserve Board released its report on the review of the supervision and regulation of Silicon Valley Bank.  Vice Chair for Supervision Michael S. Barr led the review.  According to the Federal Reserve press release, this review identified four key takeaways on the causes of the bank’s failure:

1.  Silicon Valley Bank’s board of directors and management failed to manage their risks;
2. Federal Reserve supervisors did not fully appreciate the extent of the vulnerabilities as Silicon Valley Bank grew in both size and complexity;
3. When supervisors did identify vulnerabilities, they did not take sufficient steps to ensure that Silicon Valley Bank fixed those problems quickly enough; and
4. The Board’s tailoring approach in response to the Economic Growth, Regulatory Relief, and Consumer Protection Act and a shift in the stance of supervisory policy impeded effective supervision by reducing standards, increasing complexity, and promoting a less assertive supervisory approach.

The full report contains in-depth analysis and will be carefully reviewed in conjunction with our state and national association counterparts to assess the potential impact to the financial services industry.

To read the Federal Reserve Board press release, please click here.
To read the full report, please click here.