California Banker Issue 6 2023

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regulations relating to network com petition in credit card transactions. The authors of the measures have tried unsuccessfully to bury the bill’s provisions into larger must-pass om nibus measures. Congress focused time and energy on the failures of Silicon Valley Bank and Signature Bank. Both the House and Senate conducted a series of oversight hearings where they heard from federal and state banking regu lators and executives from the failed banks. Several studies were produced by the federal regulators in response, including reports from the FDIC, Fed, and the Government Account ability Office. Not surprisingly, we witnessed more activity in the regulatory space last year with major rulemakings by fed eral regulators being finalized. On March 30, the CFPB issued its final rule implementing the Dodd-Frank Act Section 1071 Small Business Lending Reporting requirement. In October, the FDIC, Fed, and the OCC adopted the CRA Modernization rule. Finally, in November, the FDIC issued its final rule implementing a special assessment to recover the loss to the DIF associated with the clo sures of Silicon Valley Bank and Sig nature Bank. We traveled to Washington, D.C., four times to advocate on behalf of our members on pending legisla tive and regulatory matters and to strengthen the relationships we have with the California Congressional delegation. In 2022, we had the honor and privilege to meet in-person with Senator Dianne Feinstein. We were deeply saddened to learn of her pass ing this past September. Governor Newsom appointed Laphonza Butler

who intends to serve the balance of Feinstein’s term but will not run in 2024. In addition to serving on the Senate Judiciary Committee, Senator Butler has been appointed to the Sen ate Banking Committee. The year 2024 is an election year. The Presidential race will occupy the political field and will divert atten tion away from advancing legisla tion. It’s a crowded field seeking to replace Senator Dianne Feinstein, with three incumbent Democrat Congressional Representatives vy ing for the seat. California will be a battleground state for Democrats who are targeting the state in their effort to take back the House. The Democratic Party will look to unseat incumbent House Republicans who represent districts with tight voter registration. With 222 Republicans and 213 Democrats currently, the Democrats only need to flip five seats nationwide assuming they maintain their current total. The industry will continue advocat ing for legislation allowing banks to serve cannabis-related legitimate businesses and we will hope to pick up where negotiations left off on the SAFER Banking Act. Senator Durbin will press for the passage of his Credit Card Competition Act. We will also look to build more momen tum on the Access to Credit for our Rural Economy Act, a measure that exempts interest income on certain loans secured by rural or agricultural real property. Undoubtedly, we will see ongoing interest in pursuing a modernized federal privacy law. Af ter California adopted the Califor nia Consumer Privacy Act (CCPA), several states have followed with the enactment of their own updated pri vacy laws. We will see whether adop

tion of a national standard gains traction. Preemption of state laws, particularly California’s CCPA, will be a major element with some want ing the federal law to be a ceiling and others a floor. We expect increased interest in the use of artificial intelligence and au tomated decision systems. President Biden issued a comprehensive execu tive order in November requiring the development of standards, guidance and best practices. The order seeks “to ensure that America leads the way in seizing the promise and managing the risks of artificial intelligence…” and to establish “standards for AI safety and security, protects Ameri cans’ privacy, advances equity and civil rights, stands up for consumers and workers, promotes innovation and competition…” Major rulemakings will be under consideration. The Federal Reserve’s deadline for comment on proposed rules relating to enhanced capital lev els, referred to as the Basel III End game, is January 16, 2024. On a re lated note, the Fed also launched a data collection effort to gather more information from the banks affected by the capital proposal with the same January 16, 2024, comment deadline. How much time the Fed will need to absorb comments on each of these and take the next rulemaking step is unclear. Also, the comment deadline on the Fed’s proposal to reduce the maximum interchange fee on debit card transactions is February 12, 2024. We will be traveling back to Wash ington, D.C., at least four times in 2024. We hope that you might con sider joining us on these important visits.

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