Tag Archive for: Legislation

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Executive Letter: Banking Wins and Risks in “One Big Beautiful Bill”

From the Desk of Rose Oswald PoelsBy Rose Oswald Poels

The House-passed “One Big Beautiful Bill Act” (H.R. 1) included a few key wins for the banking industry — importantly, a modified version of the ACRE Act that would help to enhance competition with government-backed farm lenders and tax relief for Subchapter S banks.

Now that the bill is in the hands of the Senate, WBA has been advocating publicly and behind the scenes with our U.S. Senators to underscore how vital it is that the Senate version of the bill include at least the same modified version of ACRE as in the House bill. In coalition letters to Senate leadership, we have also requested increases to the tax exemption percentage from that contained in the House version. Finally, we continue to support the inclusion of tax relief for Subchapter S banks.

Additionally, WBA recently learned of a different provision in the House version of the bill that could become burdensome for financial institutions. A provision in the legislation would impose a 3.5% tax on all cross-border remittance transfers made by any non-U.S. citizen — applying not only to individuals remitting money, but also to all bank-to-bank cross border transfers. The language in the House version does not distinguish between remittances sent by non-citizens who are in the U.S. legally or illegally, which means the scope reaches to non-citizen business owners who are in the U.S. legally conducting their business will be subject to the 3.5% excise tax every time they transfer money out of the U.S. Banks will have to verify the citizenship status of the remittance requestor and, if that requestor is not a U.S. citizen, banks will have to collect and remit the tax to the U.S. Treasury.

Finally, the House version creates a new account called the “Trump Account” which would place $1,000 into an investment account for every newborn in the U.S. As written, the funds are placed into stock market index funds, managed by the child’s legal guardians, with the goal of building long-term financial security.

WBA will keep members apprised of these and other relevant developments as the language continues to evolve.

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Prairie Trust President Helps Enact Wisconsin Trust Code Trailer Bill

Victor Schultz

Prairie Trust, a division of Waukesha State Bank, recently issued a press release announcing that President & Chief Fiduciary Officer Victor Schultz co-chaired the joint study committee that drafted the Wisconsin Trust Code Trailer Bill, which was signed into law by Governor Evers on March 21, 2024, as 2023 Act 127.

Scott Birrenkott, the Wisconsin Bankers Association’s director – legal and staff liaison to the WBA Trust Banking Section, commented on Schultz’s involvement with the Bill, “the passage of the trailer bill is the culmination of many years of work by many individuals, which Victor has been a key part of from start to finish. But even before that, Victor has been a leader within the industry.”

The Bill clarifies various issues and adopts new uniform law provisions that have arisen since the Wisconsin Trust Code was enacted and became effective July 1, 2014. The Trailer Bill enactment is the culmination of more than eight years of effort by a joint State Bar and Wisconsin Bankers Association (WBA) study committee.

Birrenkott reflected on Schultz’s contributions, “Victor is a member of both the WBA Trust Banking Section and WBA Government Relations Committee, where he has shared his experience and knowledge for numerous years. That expertise has helped shape Wisconsin’s Trust Code into what it is today, not only with the Trailer Bill, but through his work leading to passage of the initial uniform law. Victor’s passion for the industry is inspiring.”

Significant issues affecting trust and estate administration in Wisconsin that are addressed in the Trust Code Trailer Bill include (for more details, read Prairie Trust’s full press release):

  • Clarification of the rules that allow irrevocable trusts to be modified or terminated.
  • Expansion of who can represent the interests of a trust beneficiary.
  • Specific authorization for a settlor to draft a “Silent Trust.”

Birrenkott added, “we appreciate all Victor has done and are grateful for the opportunity to work with him.”

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Farm Bill Advocacy

During both Wisconsin Bankers Association (WBA) Washington, D.C. trips this past spring, the Farm Bill was discussed as part of our policy agenda with our congressional delegation, including, notably Rep. Van Orden’s office since he is on the House Agriculture Committee. At the time, we shared that we were in support of the Farm Bill passing as most of the provisions are favorable; however, we did share concerns regarding potential language that would broaden Farm Credit’s authority. The legislation was not introduced until May 21 and at that time, WBA repeated its ongoing concerns with Farm Credit related provisions in the bill to Rep. Van Orden’s office ahead of its vote in the House Agriculture Committee. Very late Friday night, the bill (H.R. 8467) passed out of committee on a 33-21 bipartisan vote so it will now move to the House floor for consideration. It is anticipated that the House may not take up the floor vote until this Fall.

The Farm Bill as passed out of Committee contains largely positive provisions that WBA and the industry would support for the ag and banking sectors. However, it also includes provisions that WBA and the industry objected to around a broadening of Farm Credit’s powers and its compliance with current CFPB Section 1071 requirements. For example, the Farm Bill would move enforcement of Section 1071 from CFPB to the Farm Credit Administration and appears to only require collection of 3 data points – race, sex or ethnicity, provisions not extended to the rest of the banking industry. WBA will continue its advocacy against these provisions, including during our in-district meetings in August with the delegation, and encourages bankers to do the same with your respective member of the House. Again, it is anticipated that the House may not take up the bill for a floor vote until the Fall, and then it will move to the Senate where at least some of these expanded Farm Credit-related provisions are not expected to be supported. WBA will continue to keep the membership updated as actions occur on this important must-pass legislation.

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Executive Letter: Banking Modernization Bill Signed into Law

By Rose Oswald Poels

As the 2023–2024 legislative session draws to a close, I am pleased to report that WBA has successfully accomplished many of our legislative priorities. Every session presents several bills to review, but one I want to highlight today is the WBA supported banking modernization bill which was signed into law as 2023 Wisconsin Act 128 on March 21, 2024, and contains several provisions positive for the financial institutions industry. The Act comes as a bipartisan effort by the industry to modify, clarify, and simplify state statues governing financial institutions.

The Act:

  • Provides parity with the Board of Commission of Public Lands (BCPL) to allow banks to offer the same 20-year term loan that BCPL may offer to municipalities.
  • Increases the amount available from the State Deposit Guaranty Fund for losses resulting from the deposit of public money in a failed financial institution from $400,000 to $1,000,000.
  • Repeals the requirement for financial institutions to provide advance notice to DFI before acquiring, placing, or changing the location of off-site ATMs.
  • Imposes a Class H felony on a party found guilty of interfering with an ATM (e.g. smash and grab ATM crimes).
  • Eliminates certain state loan disclosure requirements applicable to residential mortgage loans and variable rate loans.
  • Eliminates a geographic lending restriction for savings and loan associations.

In this ongoing era of heavy regulation within the industry, WBA believes strongly in the need for updating outdated rules. This Act represents a positive change by updating several statutes in need of modernization.

WBA will continue to advocate on behalf of the industry and strive to accomplish our legislative goals to provide a sensible regulatory environment and assist Wisconsin banks in servicing the needs of their customers.

Be sure to read the upcoming April edition of the ‘WBA Compliance Journal’ for a full recap of recently enacted state laws affecting financial institutions.

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Supporting WBA’s Advocacy Infrastructure, a Key to Success

By Lorenzo Cruz

With the fall elections finally behind us, the Wisconsin Bankers Association (WBA) can begin pivoting in preparation for the 2023 legislative session and another round of elections occurring this spring. The passage of a state budget that includes a $6.6B budget surplus will occupy the time of most legislators, the Governor, and state agency heads. A State Supreme Court race and a special election for the 8th State Senate District will keep the candidates busy and usher in another flood of campaign spending.

Last year, outside groups shattered the previous record and spent more than $93M on the Governor and other state races, according to the Wisconsin Democracy Campaign. The skyrocketing campaign costs and the increasing need to support pro-banking candidates requires WBA to double down on the financial equation of its advocacy infrastructure. With the start of the new year, our Association is kicking off two new initiatives — the WBA Leadership Circle and the Hall of Fame — and making changes to contribution levels for the Silver Triangle Club and Gold Triangle Club.

New Opportunities to Engage

WBA’s Leadership Circle is for major investors and passionate bankers who are committed to investing and creating a healthy future for member banks and the communities they serve. To join the Leadership Circle at the platinum level, a major investor would need to contribute $3,000 or more annually to Wisbankpac (PAC) and/or Alliance for Bankers Conduit (ABW).

To achieve Hall of Fame designation, a major investor would need an aggregate lifetime investment of $25,000 or more. Leadership Circle and Hall of Fame investors benefits could include: lapel pins, certificates, pens, online recognition, Wisconsin Banker picture recognition, Capitol Day/Conference recognition, and exclusive invitation to special events.

The personal contribution level has been increased from $500 to $1,000 for the Silver Triangle award. Individual bankers can earn the award by contributing $1,000 to any combination of the PAC, ABW, or WBA’s issue advocacy fund. Silver Triangle recipients are honored annually at WBA’s Bank Executives Conference.

To receive WBA’s Gold Triangle recognition, the total contribution amounts for banks based on assets have been increased to:

Gold Triangle is the highest level of bank fundraising recognition which can be achieved by employees contributing to the PAC or conduit or through corporate contributions to WBA’s issue advocacy fund.

Looking Ahead

As we transition into 2023, it is critical that bankers join forces with the Government Relations team to replenish the depleted coffers for the PAC, conduit, and issue funds. Growing the funds allows us to support pro-banking elected officials and provides a seat at the table for those able to positively shape and influence legislation and rules impacting the industry. WBA urges Advocacy Officers to meet with bank employees to encourage them to help us meet the year-end 2023 goal of raising $300,000 in political donations.

While WBA’s advocacy infrastructure is strong, it is important to build and expand upon it. Last year, our industry faced many legislative threats, from credit unions to credit card swipe fees. These challenges will likely return in 2023 as well as a wide range of other issues like elder fraud, taxation, banking modernization, fair access, trust code, and privacy. Our Association and its members cannot afford to be bystanders while other organized and well-financed groups push legislative solutions that are harmful to banks.

While WBA is taking a proactive lead to ensure that public policies adopted are beneficial to the industry, it is critical to enlist the help of bank leaders to expand the base by designating an Advocacy Officer if they have not already done so. Moreover, WBA’s Government Relations team calls upon all bank executives, Advocacy Officers, and bankers to step up and answer the call to support WBA’s advocacy infrastructure by joining the Leadership Circle, being a Hall of Fame member, becoming a Silver Triangle member, and achieving Gold Triangle and BIGG recognition.

Now more than ever is the time to unify behind strengthening and expanding WBA’s advocacy infrastructure. The political stakes are high, but together we can function as one united voice amplifying WBA’s priorities at the State Capitol while protecting the interests of member banks doing business in Wisconsin.

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Will Inflation Bring New Swipe Fee Reform?

By Lorenzo Cruz

The credit card swipe fee debate could reignite as interest rates rise and inflationary pressures persist into 2023. If the sparks fly and catch fire, retailers could reunite to advocate for interchange fee reform, which has severe negative financial consequences for banks, the electronic payments ecosystem, and consumers alike.

The Importance of Interchange Fee

During the last legislative session, a retail coalition led efforts to introduce legislation that would have prevented banks from applying interchange fees on the tax portion of a credit card transaction and would impose a $200 fine per transaction for any entity that violates the law. Similar legislation has been offered across the nation more than forty times over the last 16 years. To date, no state has enacted the legislation, nor has this model legislation made it out of any committee.

Retailers contend this change would provide some relief for tax collection and would lower their second highest expense — credit card swipe fees. Members of the Wisconsin Bankers Association (WBA) empathize with retailers’ concerns, but there are other ways retailers could receive vendor compensation as payment for that work.

Interchange fees remain a critical revenue stream for banks of all sizes in rural and urban markets. The fees allow banks to recover the cost for fraud protection and for cybersecurity that card issuing banks provide to their customers. Retailers and consumers enjoy the credit card fee benefits of a seamless globally accepted transaction and a guaranteed payment that is secure, convenient, and affordable. Retailers also see higher volume and sales from credit card use, faster transactions, lower costs than those associated with handling checks and cash, and more sales channels.

Negative Impacts on Wisconsin

Passage of interchange fee legislation would have negative and impractical implications for the electronic payment system and consumers. Consumers would have to undergo a split tender transaction, being forced to use the credit card for the total sum of goods or services purchased in the first transaction but then would pay in cash or check for the remaining tax portion in a separate transaction. Retailers could see an increase in customer confusion and frustration as the speedy checkout line becomes a distant memory.

Currently, the electronic payment system has no way of separating out the tax piece of the transaction. Financial institutions and card networks only see the full transaction sum when approving, routing, and settling electronic payments. This design protects consumers’ privacy and allows for lightning speed transactions.

Visa’s network alone processes over $12 trillion in transactions annually. Visa has the capacity to handle over 65,000 transactions a second, however, the proposed special tax treatment change would require a major, costly overhaul of the system. The chip conversion for credit cards took over 25 years to research, test, and implement, which goes to show there is nothing simple about making changes to these networks. Wisconsin could easily become an island in the electronic payment space if the legislation passes.

With prices of gas and food increasing and talks of recession afoot, the last thing consumers would want is a legislative change that makes it potentially more difficult to use their card during these challenging times. WBA urges our retail partners and customers to pursue vendor compensation alternatives rather than tinker with the interchange fee in a harmful manner. Additionally, WBA members are encouraged to continue to educate customers and policymakers on the importance of interchange fees to banks and the communities they serve.

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Reminder: Juneteenth New Legal Holiday

Last year, President Joe Biden signed a bill on June 17, 2021, to create Juneteenth National Independence Day. The new law amends 5 U.S.C. 6103(a) to add “Juneteenth National Independence Day, June 19” as a specified legal public holiday. While this created a bit of a stir within the lending industry when the bill was signed so close to the date of the new holiday, banks have now had a year to prepare for its second observation.

Banks will have determined the extent to which they will observe the new federal holiday, including whether offices will remain open. As with any time a bank closes, it should consider what functions will remain available. Among other things banks should ensure they have provided adequate notice, consider cut-off times and prompt crediting of payments, access to safe deposit box operation, funds availability schedules, and any impact this might have on lending operations such as closing and rescission rights.

For example, as a result of the new law, the date of June 19 is not a business day under Regulation Z. Because June 19 is a Sunday this year, the holiday will be observed on the following Monday, June 20. For purposes of rescission under Reg Z, a “precise” business day test applies, meaning, the precise day is excluded from the definition of “business day” while the observed holiday (in this example, June 20) is a business day.

In summary, banks should consider if and how they have decided to observe Juneteenth this year and how it will affect their business functions. In addition, banks should consider the regulations with a definition of “business day” to determine how it might affect compliance considerations. Each regulation should be considered individually, as they define “business day” differently.

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Marijuana Legalization Coming to Wisconsin?

By John Cronin

This legislative session we have seen red proposals and blue proposals that have a lot of people wondering if Wisconsin will soon be going green. No, nobody is commending the Packers for that lackluster playoff performance or proposing we replace Bucky with the Grinch. Though we see a lot of these, I’m not referencing environmentally conscious measures, either. Ranging from people tuned into government and the apolitical, people in banking and those who are not — what is one of the most common questions I get asked? When is Wisconsin going to legalize marijuana?

I’m sure people think to themselves ‘Hey this government guy ought to know,’ but it’s also a topic lots of folks are genuinely curious about, especially as versions of marijuana legalization have been adopted by numerous states across the country, including our neighbors in Illinois, Michigan, and Minnesota. Indeed 39 states either allow for some type of marijuana consumption — either medicinal or recreational — or have removed penalties for possessing small quantities.

From the banking industry perspective, the cannabis industry represents a largely untapped market shrouded in regulatory uncertainty since marijuana technically remains a scheduled drug under the federal Controlled Substances Act. The SAFE Banking Act would go a long way to alleviating this issue by protecting financial institutions serving legitimate cannabis-related businesses operating in compliance with each respective state’s legal framework. Support for the SAFE Banking Act seems to grow each time it is voted on, but final Congressional approval remains elusive out in Washington, D.C.

Shifting back to Wisconsin and the question posed at the outset — the answer remains “To Be Determined,” but the conversation has shifted dramatically from where the discourse was just a few years ago. So where do things stand now?

Marijuana used to be a legislative subject broached exclusively by Democrats. For consecutive sessions, Democrats, including Governor Evers, have pitched full recreational marijuana legalization and regulation. Those attempts may be a bridge too far at the moment and haven’t gained much traction, failing to net even a committee hearing. But they have moved the needle.

Though derived from hemp, Republicans have embraced CBD therapeutics for certain medical disorders. GOP Assembly Speaker Robin Vos is open to a medical marijuana program. But most significantly, we have also seen two Republican-led legislative proposals this session. One bipartisan proposal would create uniform low civil penalties for possessing small amounts of marijuana, so as to prevent those individuals from being convicted of a misdemeanor or felony. In late January, a cohort of thirteen Republican legislators began seeking co-sponsors for a bill creating a medical marijuana program that tightly regulates cultivation, processing, testing, and dispensing to patients. Neither have received action this session.

Both medicinal and recreational marijuana remain illegal in Wisconsin. The 2021–22 legislative session is effectively over, and illegality will remain the status quo for now. However, as Republican aversion continues to thaw, we are bound to hear this conversation ramp up in the near future and could see movement in the 2023–24 session.

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