Senate Banking Committee Approves ILC Bill
On Wednesday, Feb. 13 the Senate Banking Committee approved Chairman Chris Dodd’s (D-Conn.) draft legislation to close the industrial loan company (ILC) loophole. The bill was approved by an 11-10 party-line vote. Congress and bank trade associations, including the Iowa Bankers Association, supported the legislation to eliminate the authority in current law that allows a commercial company to acquire an ILC.
“The separation of banking and commerce is vital to our economic system,” said John Sorensen, IBA president and CEO. “The IBA thanks Chairman Dodd for his leadership and efforts on this important issue.”
The legislation would prohibit commercial companies from chartering or acquiring ILCs; prevent existing commercial ILCs from expanding through interstate branching; and provide for FDIC oversight of ILC parent companies that currently are not subject to a banking regulator. The proposed Senate language is more restrictive than that of an ILC bill (H.R. 698) that the House passed in May by a decisive 371-16 vote.
As the bill proceeds to the Senate floor, the IBA and the American Bankers Association urge the full Senate to pass the legislation quickly.
Farm Bill Conference Committee Members Announced
Senators Tom Harkin (D-IA) and Saxby Chambliss (R-GA), the Chairman and Ranking Member respectively of the Senate Committee on Agriculture, Nutrition and Forestry, have announced the Senators who will join the conference committee tasked with merging the Senate farm bill with the House version. Sen. Harkin will chair the conference committee, which also includes Iowa Republican Sen. Charles Grassley.
Iowa bankers should take this opportunity to contact Sens. Harkin and Grassley and ask them to resist any effort to attach the Farm Credit System non-farm lending proposals to the conference report. FCS failed to get their provisions included in either bill. Yet, under conference rules, they remain a live round.
The complete list of Democratic Senators selected for the conference committee includes Max Baucus (D-MT), Kent Conrad (D-ND), Patrick Leahy (D-VT), Blanche Lincoln (D-AR) and Debbie Stabenow (D-MI).
In addition to Grassley and Chambliss, the list of the Republican Senators selected for the conference committee includes Richard Lugar (R-IN), Thad Cochran (R-MS) and Senator Pat Roberts (R-KS).
Massachusetts Association Reflects on TJX Settlement
Following the settlement of its data breach suit against The TJX Companies, Inc. in December, the Massachusetts Bankers Association (MBA) reports that the end result of remanding the case to the state level, the TJX/Visa settlement, TJX’s PCI compliance and enhanced awareness were significant steps forward.
Actions taken by the MBA contributed to several key advancements, including:
- Consumers now recognize that cards are reissued to protect them from lost data at retailers – not banks.
- National media attention was persistent and widespread. Coverage included a major segment on CBS’ 60 Minutes and front page coverage in the Wall Street Journal, Boston Globe, and American Banker.
- TJX is now PCI compliant and the retail industry’s compliance level has substantially increased from 40% to nearly 70% since the suit was filed.
- TJX and Visa announced an unprecedented $41 million settlement reimbursing banks directly for their losses.
- The Court praised the banking and credit card industries for their actions in protecting consumers and ruled that trade associations are legitimate plaintiffs in filing injunctive relief. Similarly, banks were provided the right to sue at the state level on both claims of negligent misrepresentation and unfair/deceptive practices.
IBA honors student athlete with $1,000 scholarship
Ian Mitchell, a senior at New Hampton High School in New Hampton, received the sixth annual Iowa Bankers Association Student Athlete Achievement Award in Wrestling. The award recognizes an athlete who excels not only in wrestling, but also in the classroom and in the community.
Chuck Yagla of Kirk Gross Company and Terry Anderson of First Citizens National Bank in New Hampton presented Mitchell with a $1,000 scholarship to a college of his choice. Yagla was a two-time national collegiate wrestling champion and a two-time Olympic wrestling team member and a member of the nomination committee.
Along with an outstanding record of academic achievement, Mitchell is currently captain of the wrestling team and has participated in wrestling and football all four years. He is class president and a member of the National Honor Society. Throughout high school, Mitchell has also participated in Students Against Destructive Decisions, Business Achievement Club and Student Senate.
Mitchell and New Hampton High School will be featured in a 60-second television commercial to be aired during the 2008 State Wrestling Tournament.
Chuck Yagla of Kirk Gross Company (left) and Terry Anderson of First Citizens National Bank (right) presented Ian Mitchell with the $1,000 scholarship.
Iowa Supreme Court construction ruling impacts builders
An Iowa Supreme Court ruling could have a dramatic impact on construction businesses, says attorney Brian Rickert of BrownWinick in Des Moines. Rickert served as counsel for Walters Development Company, Ltd., the appellee in an Iowa Supreme Court case that was decided on Feb. 1.
“This ruling will have a dramatic impact on the way homes are built and sold in Iowa,” Rickert said.
Plaintiffs Robert and Beverly Speight originally filed a lawsuit against Walters Development Company, Ltd. in Polk County District Court claiming that their home’s roof and gutters were defectively constructed. The District Court in Polk County dismissed the claims on the grounds that Iowa law did not extend implied warranties to subsequent purchasers of a home. The Iowa Court of Appeals affirmed the decision, and the Iowa Supreme Court recently allowed further review on the matter.
The Supreme Court’s Feb. 1 ruling stated that builders are responsible for homes for 15 years after they are constructed no matter who owns the home.
“The Iowa Bankers Association is reviewing the court decision to determine the impact on homeowners and builders,” said IBA President & CEO John Sorensen. “This is not an opportune time to introduce further uncertainty in home construction.”
Rickert noted that as a result of the ruling, the courts could be flooded with lawsuits from original and subsequent homeowners who could claim the builder must cover defects in the home, including items of normal wear and tear.
New Mortgage Foreclosure Data Ranks Iowa 33rd
RealtyTrac, an online marketplace for foreclosed properties nationwide, has released data ranking Iowa 33rd during 2007 in foreclosure filings as a percentage of total households. Iowa homes with foreclosure filings in 2007 represent slightly more than 0.3 percent of the total households in the state. These Iowa figures represent a 66 percent increase over 2006 numbers (nationally, foreclosure filings increased 79 percent in 2007 over the prior year).
One factor aiding in the stability of Iowa foreclosure filings over the rest of the country is the lack of rapid changes in value that have left many homeowners in other areas, such as California and Nevada, owing more on their homes than their property is worth. Additional 3rd quarter 2007 data released from the Mortgage Bankers Association rank Iowa 47th nationally in the percentage of sub-prime loans to total residential loans, which may also contribute to Iowa being below the national average in foreclosure filings as a percentage of total households.
Click here to view the report on the current state of mortgage lending.
Banks Help College Students by Funding Student Loans
Iowa Student Loan has announced that it is joining with the state’s banks and credit unions to help ensure that Iowa students have money available to help pay for college this fall. Many Iowa college students and families rely on student loans in part or whole to pay for college.
The recent credit volatility in the national financial markets, triggered by problems with sub-prime mortgages, has led to a potential shortage in funding for other consumer credit instruments including student loans.
“Based on the cutbacks already announced by major national student loan providers, we know there may be a shortage of student loans this fall if financial markets do not turn around,” said Steve McCullough, CEO of Iowa Student Loan. “We have asked our lender partners to join with us as we attempt to mitigate the impact of this potential shortage here in Iowa.”
Effective for the 2008-2009 academic year, banks and credit unions in Iowa are agreeing to fund a significant amount of federally guaranteed student loans from their available resources and hold them in their respective portfolios. Iowa Student Loan will continue to provide administrative expertise and servicing, which is essential to maintaining federal loan guarantees as well as compliance with the complex rules associated with federal student loans.
“Helping Iowa students succeed has always been a priority for Iowa bankers,” said John Sorensen, IBA president and CEO. “This program is an investment for Iowa’s future.”
ICD seeks economic development projects
Iowa Community Development (ICD), a CDE established with the support of the IBA, is looking for economic development projects that are planned or proposed in census tracts designated by the Treasury as a “Low Income” or “High Out Migration,” (click here to see the map).
ICD needs to demonstrate to the CDFI fund that it would have eligible projects. ICD received a $45 million dollar allocation in 2006. Bankers with a project that is in a census tract and is at least $2,000,000 in size should contact Dan Robeson or Jim DePauw at Iowa Business Growth at 515.223.4511.
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