May 9, 2024

Parson Signs MOBUCK$ Bill

Funding increase for program effective Aug. 28

Gov. Parson signed legislation today in Springfield that increases the cap for the MOBUCK$ program. House Bill 1803 increases the cap for the state’s linked deposit program from $800 million to $1.2 billion. The increase is effective Aug. 28.

House Bill 1803 was a priority measure for MBA this legislative session. Through MOBUCK$, the state treasurer may invest state dollars in Missouri banks to provide loans at reduced rates to small businesses and agricultural producers, among other types of loans.

“This legislation recognizes the importance of the MOBUCK$ program for Missouri farmers and small businesses and the critical role banks play as economic drivers in their communities,” said MBA President and CEO Jackson Hataway.

Rep. Terry Thompson, R-Lexington, sponsored the legislation, and Sen. Sandy Crawford, R-Buffalo, handled the bill in the Senate.

“We thank Rep. Thompson and Sen. Crawford for their leadership in guiding the bill through the legislative process, as well as Missouri Treasurer Vivek Malek,” said MBA Senior Vice President David Kent. “Our members were key to this bill’s success. In their discussions with their state lawmakers, they emphasized the importance of increasing the cap to ensure Missouri farmers and small business owners could access credit at lower rates to support their operations.”

Second MBA-Priority Measure Heads To Governor

Another priority measure for MBA this legislative session was sent to the governor’s desk Wednesday afternoon. The Senate approved Senate Bill 1359 by a 28-4 vote after the House approved the measure Tuesday. The legislation was amended to include language that will allow banks to pass through the costs of credit reports on consumer loans to consumers. It also includes the following provisions.

• exempts consumer loans of less than $5,000 secured by ag real estate from usury limits
• removes antiquated notary acknowledgment form in Missouri’s real estate code
• updates Missouri’s “sale of checks” law to a uniform money transmitter licensing and oversight model under the supervision of the Missouri Division of Finance
• establishes a new licensing and regulatory scheme for revenue-based financing companies
• amends the Missouri’s Family Trust Company Act to move regulatory authority from the Missouri Secretary of State to the Missouri Division of Finance
• modifies qualified spousal trusts law to extend tenancy by the entirety status to protect assets in a QST, even when a spouse passes away

If the bill is approved by Gov. Parson, the provisions are effective Aug. 28.

MBA thanks the bill sponsor, Sen. Curtis Trent, R-Springfield, and the House handler, Rep. Phil Christofanelli, R-St. Peters, for ushering Senate Bill 1359 through the legislative process. MBA also thanks Sen. Sandy Crawford, R-Buffalo, and Rep. Michael O’Donnell, R-St. Louis, for sponsoring the MBA-supported provision that was included in Senate Bill 1359.

KC Banks Report Business Identity Theft Fraud

Banks in the Kansas City metro area have reported recent business identity theft fraud involving stolen business checks and phony and/or amended official documents filed with the Secretary of State’s office.

One bank notified MBA that a suspect came to the bank to open a new business account with a stolen check. Bank employees had a bad feeling about this new account, so they investigated the matter further and confirmed that the check was stolen. The bank reported it to law enforcement.

Recent amendments to existing corporate filings or new registrations in Missouri (or another state) for Missouri companies or for out-of-state companies may alert banks to perform further due diligence.

Missouri Bank Shares Concerns On Credit Card Mandates At CFPB Hearing

A Missouri bank shared its concerns about legislation to impose government mandates on credit card routing networks during an agency hearing today on airline and credit card rewards programs.

Charles Kim, executive vice president and chief financial officer for Commerce Bank in St. Louis, expressed the following during today’s hearing hosted by the Consumer Financial Protection Bureau and the U.S. Department of Transportation.

“The credit card business is fiercely competitive and highly regulated, which is why fewer and fewer banks are able to issue their own credit cards. Credit card rewards are key benefits that influence consumer’s choice of which credit card to own and which to use at the point of sale.

I would caution those that are seeking to regulate points and rewards as we find that attempts to protect consumers frequently result in unintended consequences, reducing options and services for those consumers and concentrating those options with the largest providers.

My main purpose in being on this call is to call attention to efforts in Congress via the Credit Card Competition Act which would render this discussion moot. Reducing interchange rates via regulation will kill the rewards programs that consumers value so highly, reduce the security of our credit card transactions and reduce travel.” 

MBA President and CEO Jackson Hataway called the hearing “a complete farce” and said the CFPB “couldn’t be a more obviously politicized agency.”

MO Banker Featured In ABA Article On Checks

Luanne Cundiff, president and CEO of First State Bank of St. Charles in St. Charles, is featured in the cover story focusing on paper checks in the latest issue of ABA Banking Journal. The article explores the continued use case for paper checks by businesses and consumers, and what technology and tools exist to replace them.

“More and more banks are realizing that implementing technology to uncover fraudulent transactions is a good use of dollars,” Cundiff said. “Another thing is encouraging their client base to take responsibility for reviewing their statement more often than once a month by the use of additional technologies.”

Agencies Seek To Restrict Incentive Compensation

Banking and housing regulators have reintroduced a 2016 proposed rule to establish new limits on incentive compensation at institutions with at least $1 billion in assets. The 2016 draft being re-proposed creates a three-tiered approach based on the size of the institution, from $1 billion to $50 billion, $50 billion to $250 billion and more than $250 billion, with larger institutions subject to stricter requirements.

MBA staff is reviewing the proposal but notes initial concerns. It objects to the treatment of banks in asset classes and the problems it creates with talent retention.

“The reintroduced proposal is as flawed as the original from 2016,” said MBA President and CEO Jackson Hataway. “The current proposal doesn’t take into considerations the comments that were raised with the previous proposal.”

Section 956 of the Dodd-Frank Act requires the following agencies to jointly issue regulations or guidelines to prohibit incentive-based compensation arrangements that encourage excessive risk-taking at financial institutions with at least $1 billion in assets.

• Federal Reserve
• Federal Deposit Insurance Corporation
• Office of the Comptroller of the Currency
• National Credit Union Administration
• Securities and Exchange Commission
• Federal Housing Finance Agency

Neither the Federal Reserve nor SEC joined the other agencies in proposing the rule.

“The fact that all of the agencies didn’t sign onto this proposal indicates how many flaws it has,” Hataway said.

FDIC Chairman Martin Gruenberg has said the proposal won’t advance unless it is adopted by all six agencies.

MO Reps Call For FDIC Chair To Resign

Congressman Blaine Luetkemeyer and Congresswoman Ann Wagner are calling for Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation, to resign following this week’s report that found the agency failed to provide its employees a workplace safe from sexual harassment, discrimination and other misconduct.

The report found the FDIC nurtured “a patriarchal, insular and risk-averse culture” that contributed to the conditions that allowed for misconduct. It also found that widespread fear of retaliation prevented employees from speaking out, and that the response by management to reports of misconduct “have been insufficient and ineffective.”

Luetkemeyer said Gruenberg’s “failure to lead, disregard for managerial duties and inability to operate as a responsible employer and regulator have reached a critical juncture with this damning report the FDIC commissioned to look into its workplace culture.” In a post on X, Wagner said that “instances detailed in this report are despicable and are clearly the result of broken, sexist, and reprehensible top down leadership that has failed the FDIC and all its workers.”

The independent investigation was conducted by the law firm Cleary Gottlieb and was commissioned by the FDIC following media reports of widespread misconduct at the agency.