The Iowa Supreme Court filed two opinions last week that affect Iowa chartered banks’ collection and customers’ payment of nonsufficient funds (NSF) fees. In Legg v. West Bank, the court had two issues of unsettled law to determine: first, are NSF fees subject to usury laws under the Iowa Consumer Credit Code (ICCC) and second, if the banks’ reordering of payments were conducted in bad faith or unjustly enriched an Iowa bank. This blog is the first of two blogs discussing the holding in the Legg v. West Bank opinions and the consequences of these decisions for Iowa banks. This blog specifically examines the Leggs’ claims that West Bank’s NSF fees were usurious—finance charges in excess of twenty-one percent—which would violate the ICCC.  The implications of this case are profound.
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Overview / Major Events
As the 2016 Session of the Iowa General Assembly approached, the issue of school funding took center stage as leaders from both Chambers and both political parties suggested early resolution of this issue would be key to finding common ground on a whole host of other, unrelated issues.

At the end of the 2015 Session, Governor Branstad used his line-item veto to remove $55 million of one-time funding for K-12 schools in Iowa.  His message at that time echoed earlier themes from his administration – namely, that he would not approve the use of one-time revenues to fund on-going expenditures.  That veto set off a firestorm in the education community and it became clear that finding resolution on that issue early in 2016 was a high priority for both the House and Senate.

To that end, the House this week took up two bills on education spending that would set K-12 spending growth for the fiscal year beginning July 1, 2016 (FY17) at 2.0%.  Both bills passed on largely party line votes.  In response, the Senate sent back the same legislation with a growth level of 4.0% and both bills are now headed to conference committee.  Expect the conference committee to begin work next week.

Of additional note, Governor Branstad, in his proposed FY17 budget, proposed a growth level of 2.45% for K-12 schools in FY17.

Overview / Major Events
On Monday the General Assembly did not meet in honor of the Martin Luther King holiday and, thus, it was a short legislative week with relatively little action (short of bill introductions and the start of subcommittee work). What did get underway in earnest was the legislative budget process as the various joint budget subcommittees began their work of developing the legislative response to Governor Branstad’s proposed budget.

Given the expectation of a short 2016 Session and the relatively limited new money available for spending, the budget process is likely to be the primary focal point of the entire session. To that end, here are some of the significant features of the FY 17 budget proposed by Governor Branstad last week:

Highlights of Governor Branstad’s Proposed FY 17 Budget
Estimated revenue for FY 16 and FY 17 (top three revenue sources):

• Personal Income Tax:  $4.50 billion (FY16), $4.71 billion (FY17)
  
• Sales / Use Tax:  $2.84 billion (FY16), $2.91 billion (FY17)
• Corporate Income Tax:  $500 million (FY16), $495 million (FY17)

SSB 3018, a study bill containing provisions that allow credit unions the ability to secure trust powers currently sits with an Iowa Senate subcommittee.  While this bill has not yet been introduced in the Iowa House, CBI advocates for amendments--particularly in Section 7 - Powers--that prevent this power grab sought by Iowa's credit unions.​

​CBI Lobbyist Jeff Boeyink met with the CBI Board of Directors to detail the proposed Credit Union Transparency Act, a joint project between CBI and the Iowa Bankers Association to define large complex credit unions, and requiring them to file detailed financial statements with the State of Iowa. CBI has been registered with the Iowa Congress as Opposed to this bill, and will remain so until amendments stripping that Section of the bill have been made or until the bill dies.

View the Legislative Bill Tracker.

Overview / Major Events
The 2016 Session of the 86th Iowa General Assembly opened for business at 10 am on Monday, January 11 and commenced with the formal resignation of House Speaker Kraig Paulsen and the unanimous election of Representative Linda Upmeyer as the Speaker of the Iowa House.

Speaker Paulsen had made his intentions to resign his position as Speaker known months ago and the House Republican caucus held an internal election to designate her successor.  However, since the Speaker of the House is a position that can only be elected by the full House, the formal process could not occur until the first day of Session.

The election of Speaker Upmeyer made Iowa history in that she is the first female to ever serve in this, the highest office of the Iowa House. Her election was also nationally historic in that with her election, both she and her father, the late Del Stromer, have now both served as Speaker of the Iowa House. This is the first father-daughter combination to ever hold the same Speaker’s chair in the nation.

The 86th Iowa General Assembly will officially begin on January 11, 2016. As we near the start of a new legislative session it is fitting to review what exactly Community Bankers of Iowa advocates for on the Hill, both in Iowa and Washington DC.

Below are the current policy resolutions CBI supports and advocates for on behalf of Iowa’s independent, community banks and bankers.  Download Policy Issues  (PDF)

1.  CBI continues to support beneficial and fair competition among insured depository institutions through active enforcement of Iowa’s laws relating to multi-bank holding company deposit concentration and CBI will remain active in any ongoing dialogue to ensure that existing limitations remain and enforceability continues.
2.  CBI supports parity for Iowa-based financial institutions with out-of-state entities.
3.  CBI supports the right of individual states to regulate financial institutions within their borders, regardless of charter source and selection.  As a result, CBI opposes blanket preemption of state laws designed to protect the welfare of Iowa’s citizens by any federal agency or regulator and supports legislation or regulations that defer to state-established minimum standards over federally-established minimum standards for Iowa financial institutions.
4.  CBI supports legislation designed to provide parity to Iowa banks in cases where federally chartered banks have privileges or permissible activities not allowed to state chartered banks to better enable Iowa chartered banks to remain competitive and thereby better able to serve Iowa consumers.
5.  CBI supports state policies that strengthen, diversify, and promote adding value to Iowa’s agricultural production including alternative fuel and energy production.