Advocacy Alert- 04/14/2003

Urgent: Contact your state legislators TODAY regarding AB 1226

If you haven’t already done so, now is the time to contact your state Senator and Assembly Member to ask them to support AB 1226 (Montanez), which directs the Legislative Analyst to undertake a study of the anti-competitive effects on community banks in California of large credit unions with expanded membership that offer commercial products and services. The credit unions have attempted to mischaracterize this legislation and the banking industry needs to respond with force.  (Please see “Additional Credit Union information” for further explanation.)

Although we have asked our members to contact their legislators and urge support of AB 1226, we have heard from only eight CBA members who have responded to our call for action. Our thanks to C. Michael Ziemann of Summit Bank, Thomas C. Meuser of El Dorado Savings Bank, Robert R. Reed of Imperial Capital Bank, Douglas F. Sawyer of Legacy Bank, Stan Cherry of Santa Lucia Bank, Craig G. Blunden of Provident Savings Bank, Steven R. Gardner of Pacific Premier Bank, and Robert McGill of Neighborhood National Bank who have responded to our call.  If you have contacted your legislator about this issue, please let us know. 

Because AB 1226 (Montanez) is set for hearing in the Assembly Banking Committee on April 21, it is imperative that you contact your legislator by phone, fax or mail to urge them to support our bill as soon as possible (see attached roster).  It would be very helpful to also send a copy of your letter to the Committee members as identified below.  Three sample letters are provided for your information; however, be sure to personalize your letter with your own bank’s experience with the competitive disadvantage it faces in the marketplace.  Please forward a copy of your letter or the results of any telephone conversations with your legislator to the CBA Sacramento office; Attention: Maurine Padden (email: mpadden@calbankers.com or facsimile: 916/441-5756).

Assembly Banking and Finance Committee:

Chair: Patricia Wiggins

Vice Chair: Russ Bogh

Members: Ronald Calderon, Wilma Chan, Ed Chavez, Ellen Corbett, Lou Correa, Guy Houston, Tim Leslie, Cindy Montanez, Tony Strickland and Juan Vargas

House passes deposit insurance reform

Last week, the House passed the deposit insurance reform bill, H.R. 522, by a vote of 411 – 11.  Unlike last year; however, there is a strong likelihood that the Senate will pass the legislation as well, albeit a vastly different version.  The House bill would merge BIF and SAIF and increase the general deposit ceiling to $130,000, the ceilings on various retirement accounts to $260,000, and the ceiling on municipal deposits to as much as $2 million.  It would also repeal the so-called 1.25 percent cliff and reinstate premiums.

The very highest rated banks could be assessed no more than 1 basis point per annum, provided the reserve level is above 1.15 percent.  Banks that had paid premiums prior to 1997 would receive an average 12 basis point credit against future premiums and rebates would be paid if the fund ratio exceeds 1.35%.  The deposit ceiling would be indexed for inflation every five years.  A bill is likely to be introduced in the Senate shortly after the Easter recess.  It will be drafted by the Treasury and regulators and is unlikely to contain any ceiling increases.  Caps on premiums and even on how high the FDI Fund can grow are also uncertain in the Senate.

Interest on business checking update

Last week the House cleared legislation, H.R. 758, authorizing up to 24 transfers a month out of business checking into interest-bearing accounts, and lifting the ban on paying interest directly on business checking accounts two years following enactment.  The legislation also authorizes the Fed to pay interest on sterile reserves.  One controversial item also included in the bill approved by the House panel would authorize Industrial Loan Companies to offer NOW accounts to business customers at the same time the ban against interest on business checking comes off.  The Fed and many banks are concerned that some ILCs are owned by non-financial companies.

Regulatory relief legislation

The House Financial Institutions Subcommittee approved and sent on to full Committee H.R. 1375, the regulatory relief bill.  The legislation is virtually the same bill the committee approved a year ago, but it stripped a controversial amendment that would have required a financial institution to notify a customer every time it made a report to a reporting agency that was “adverse” to the customer. 

One provision in the bill that allows non-federally insured credit unions to join Home Loan Banks ran into some unexpected opposition from ranking Democrat Paul Kanjorski who offered, but later withdrew, an amendment that would have stripped the provision from the bill.  He indicated he might offer the amendment again in full Committee.  Another Kanjorski amendment, friendly to credit unions, was also withdrawn in the face of GOP opposition.  It would have authorized credit unions to build commercial buildings in “underserved” neighborhoods and lease out space not needed for the credit union itself.  Subcommittee Chairman Bachus promised to work with Kanjorski to narrow the amendment that could be offered again in full Committee.  Otherwise, the Subcommittee agreed to an amendment that would increase the terms of Home Loan Bank directorships, both elected and appointed to four years.  Another provision of the bill removes a present statutory requirement that FHLB director salaries may not exceed $15,000.  The legislation would authorize the Comptroller to charter national banks structured as limited liability companies and it removes a large number of interstate branching restrictions.  It substantially liberalizes both consumer and business lending powers of thrift institutions and it places thrifts on par with banks insofar as exemptions from SEC registration requirements are concerned.

Check truncation bill advancing

Both House and Senate committees have held hearings on a rapidly advancing bill promoted by the Federal Reserve and strongly supported by banking interests that would give electronic images of checks the same legal status as the paper check itself.  The legislation would allow a presenting bill to withhold, or “truncate,” a check enabling an electronic image of the check to be processed and cleared.  The Fed removed one controversial provision from the bill, paving the way for the unqualified support of the banking industry.  That provision would have required 24-hour recrediting to any depositor who could demonstrate that an error had been made.  The industry argued that present law was adequate to protect customers.  Present law does not impose a time limit for recrediting.   The legislation is expected to result in substantial back office savings to the industry.   The leadership of both committees has promised fast action on the underlying legislation, and it is possible that this could be the first banking bill to be enacted in this Congress.

Sixteen Congressmen urge OCC to put brakes on pre-emption

In a sharply worded letter to Controller Hawke, 16 House Members, including the ranking Democrat on the Financial Services Committee, urged the OCC to move more slowly in using its pre-emption authority.  While a controversial Georgia predatory lending statute was the specific target of the Congressional letter, its thrust went directly to the OCC’s authority and indicates just how difficult it will be to persuade Congress to enact uniform standards on either sub-prime mortgage lending or privacy.  The Congressional letter complained that the industry should not be allowed to completely ignore state efforts to combat consumer abuses.  

Credit union issue breaks into the media

As a result of some hard work from CBA’s Government Relations and Communications departments, CBA secured some initial media coverage for AB 1226 in the San Diego Daily transcript, the legal publication in San Diego (please see “Daily Transcript article”). In addition, CBA is pursuing additional coverage on the issue with the Los Angeles Times and the Sacramento Bee and is interested in securing additional coverage.  As more of these articles are printed, we will share them with you in subsequent issues of the Monday Courier.

CBA a media presence on identity theft

For the last few years, CBA has heard from its membership that the Association needs to be more visible on more consumer-friendly issues, particularly identity theft.  Though it has been difficult to secure media coverage for the industry on this very important consumer issue in the face of the financial privacy debate, CBA has successfully secured several noteworthy media clips on the issue in the first quarter of this year.  CBA participated in a segment with “The NewsHour with Jim Lehrer” on January 1; the political affairs show “Capitol Counterpoint,” which aired on syndicated television stations across the state; and also a recent radio interview on identity theft on KLSX-FM in Los Angeles.  As a result, CBA has already reached nearly eight million viewers/listeners with the industry’s proactive and pro-consumer perspective on identity theft.  Because of the high quality of these appearances and our regular communication with reporters on the issue, CBA is now considered a viable and reliable source for identity theft stories. If you or your bank is interested in participating in an interview on the issue of identity theft, please contact Anissa Yates, VP of Communications at 916/441-7377 ext. 208.  As more of this favorable coverage is secured, it will be shared with you via the Monday Courier.

Grassroots Update

The following meetings have been scheduled between CBA members and their elected officials.  If you would like more information on these meetings, or would like to participate in any of the meetings, please contact Mary Boruff at 916/441-7377, ext. 207.  If you are not available, please consider sending an officer from your bank.

You are welcome to phone in to a grassroots conference call (1-888-903-2663) every Thursday afternoon (4:00 pm – State Legislature / 4:30 pm – House of Representatives) prior to a scheduled district office meeting(s) to discuss CBA’s priority issues and to answer any questions you may have regarding meeting with your legislator.

DATE	TIME	LEGISLATOR	LOCATION
April 14	1:45 p.m.	Assembly Member Judy Chu (CBA Facilitator: Rich Jett)	Monterey Park
April 16 ***	11:30 a.m.	Senator Denise Moreno Ducheny * (CBA Facilitator: Mike Jones)	Chula Vista
April 17 ***	2:00 p.m.	Congresswoman Zoe Lofgren (CBA Facilitator: Doug White)	San Jose
April 18 **	2:30 p.m.	Assembly Member Lynn Daucher (CBA Facilitator: Rich Jett)	Brea
April 18 **	10:00 a.m.	Assembly Member Manny Diaz (CBA Facilitator: Bob Longatti)	San Jose
April 18	10:00 a.m.	Assembly Member Abel Maldonado (CBA Facilitator: Mike Jones)	San Luis Obispo
April 18	10:00 a.m.	Assembly Member Barbara Matthews (CBA Facilitator: Doug White)	Stockton
April 24 ***	12:00 noon	Senator Jeff Denham * (CBA Facilitator: Doug White)	Modesto
April 25	10:30 a.m.	Senator Jim Battin (CBA Facilitator: Doug White)	Palm Desert
April 25 ***	10:30 a.m.	Assembly Member Sally Lieber * (CBA Facilitator: Leland Chan)	San Jose
April 25	1:30 p.m.	Assembly Member George Nakano (CBA Facilitator: Rich Jett)	Torrance
April 25	10:00 a.m.	Assembly Member Robert Pacheco (CBA Facilitator: Rich Jett	City of Industry
April 25	10:30 a.m.	Assembly Member Pat Wiggins (CBA Facilitator: James Clark)	Santa Rosa
May 14 ***	4:00 p.m.	Assembly Member Darrell Steinberg (CBA Facilitator: James Clark)	State Capitol Sacramento
May 16	10:00 a.m.	Assembly Member Bob Dutton * (CBA Facilitator: Rich Jett)	Rancho Cucamonga
May 16 ***	1:00 p.m.	Assembly Member Tom Harman (CBA Facilitator: Rich Jett)	Huntington Beach
May 16	2:00 p.m.	Assembly Member Jay La Suer (CBA Facilitator: Doug White)	La Mesa
May 16 ***	10:00 a.m.	Assembly Member Keith Richman (CBA Facilitator: John Reardon, Union Bank of California, Santa Clarita)	Granada Hills
May 30	2:00 p.m.	Senator Dick Ackerman (CBA Facilitator: James Clark)	Tustin
May 30	3:00 p.m.	Assembly Member John Campbell (CBA Facilitator: James Clark)	Irvine
May 30	11:00 a.m.	Assembly Member Dario Frommer (CBA Facilitator: Ray Dumser, Verdugo Banking Company, Glendale)	Glendale
May 30 ***	2:00 p.m.	Senator Sheila Kuehl (CBA Facilitator: Don Robinson, Bank of the West, Los Angeles)	Los Angeles
May 30 ***	10:00 a.m.	Assembly Member Sarah Reyes (CBA Facilitator: Bob Longatti)	Fresno
June 13	10:00 a.m.	Assembly Member Ed Chavez (CBA Facilitator: Rich Jett)	City of Industry
June 13	10:00 a.m.	Assembly Member Rick Keene (CBA Facilitator: Steve Johnson, Butte Community Bank, Chico	Chico
June 20 ***	10:00 a.m.	Assembly Member Christine Kehoe (CBA Facilitator: Mike Jones)	San Diego
June 20	10:00 a.m.	Assembly Member Carol Liu (CBA Facilitator: Rich Jett)	Pasadena
June 27 ***	2:30 p.m.	Assembly Member Paul Koretz (CBA Facilitator: Tom McCullough, First Regional City, Century City)	West Hollywood

*          Freshman legislator

**        Meeting rescheduled – new time

***      Meeting rescheduled – new date/time