2020 Regular Session: Week 3 Recap

During the third week of the 2020 Regular Session, the association’s top legislative priority, the Financial Exploitation Prevention Act, advanced out of the House Financial Services and Senate Banking and Insurance Committees on Wednesday. Legislators on each committee asked productive, incisive questions about the impact of the legislation, and it seems from both public and private discussions that many representatives and senators have personal stories involving financial exploitation. Both bills – House Bill 207, sponsored by House Financial Services Committee Chairman Rep. Chris Blackshear (R-Phenix City), and Senate Bill 166, sponsored by Senate Banking and Insurance Committee Chairman Sen. Shay Shelnutt (R-Trussville) – are now in position to be voted on by the full House and the full Senate.

In short, the Financial Exploitation Prevention Act provides financial service providers with additional tools to address the rise of financial exploitation among elderly and vulnerable adults. Below is a quick, three-point summary of the bill:

  1. Investigation
    1. Gives financial service providers the ability to refuse or delay transactions on accounts of elderly or vulnerable adult customers when there is a reasonable belief that financial exploitation has occurred or is being attempted
    2. Requires financial service providers to notify (i) the accountholder, if a transaction has been refused or delayed, and (ii) the DHR and the appropriate law enforcement agency, if financial exploitation has occurred
  2. Intervention
    1. Allows an elderly or vulnerable customer to provide a list of persons for the financial service provider to contact when there is a reasonable belief that financial exploitation has occurred or is being attempted
    2. Gives financial service providers ability to convey suspicion of exploitation to anyone (i) listed by the customer, (ii) listed on the account, and (iii) reasonably associated with the accountholder, such as an attorney or an accountant
  3. Immunity
    1. Makes clear that a financial service provider never has to contact someone who is a suspected perpetrator of the financial exploitation, even if that person is otherwise eligible to be contacted about the potential exploitation
    2. To encourage reporting, financial service providers acting in a reasonable manner are immune from liability for reasonable actions taken in response to a reasonable belief that exploitation has occurred or is being attempted

The association looks forward to following these bills through the process and, hopefully, all the way to Gov. Kay Ivey’s desk!

As always, Capitol Notes provides readers with a brief summary of legislation that might impact Alabama’s banking industry. Those summaries are as follows:

House Bill 21 by Rep. Chris Pringle (R-Mobile) expands the Alabama Residential Mortgage Satisfaction Act to include commercial agricultural property, meaning secured creditors would be required to record the satisfaction of a mortgage for commercial agricultural property upon a written request of a mortgagor or a creditor of the mortgagor. The bill was favorably reported by the House Financial Services Committee on February 19 and is now able to be voted on by the full House.

House Bill 159 by Rep. Craig Lipscomb (R-Rainbow City) clarifies how a Credit Union calculates its taxable income for state income tax purposes. Current law allows a Credit Union to deduct “reasonable additions to reserves for losses, bad debts, or extraordinary expenses” from its calculation of taxable income. With the 2019 passage of the Financial Institution Excise Tax Reform Act (“FIETRA”), the Alabama Department of Revenue became more focused on the breadth and scope of this deduction. So, working with the Credit Union industry, legislation was developed to ensure that this deduction was only used for its intended purpose. This legislation does not in any way impact how a bank calculates its tax liability. The bill was favorably reported by the House Financial Services Committee on February 19 and is now able to be voted on by the full House.

Senate Bill 103 by Sen. Linda Coleman-Madison (D-Birmingham) increases the fee paid to probate judges to record mortgages and earmarks the additional revenue to the Housing Trust Fund. Under current law, the recording tax equates to $75 for every $50,000 of indebtedness, with the revenue distributed to probate judges, counties, and the state. Under this proposal, the recording tax would equate to $100 for every $50,000 of indebtedness. The revenue would still be distributed to probate judges, counties, and the state, but one-tenth of the revenue would also be distributed to the Housing Trust Fund. This fund was created several years ago but has never been funded by the Legislature. Funds would be allocated by an Advisory Board to non-profit entities around the state that work to provide low-income housing. The bill was originally referred to the Senate Governmental Affairs Committee but was re-referred to the Senate Finance and Taxation – General Fund Committee. It was originally placed on that committee’s agenda on February 19 but was carried over at the request of the sponsor. Several trade associations oppose the legislation.

As of the end of the sixth legislative day, legislators have introduced 535 bills – 310 in the House and 225 in the Senate – and 75 resolutions. The 2020 Regular Session can last for no more than 30 legislative days and must end on or before May 18.

The Legislature will reconvene for its seventh legislative day on Tuesday.