Pub. 14 2017 Issue 2

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S 10 • Specifies the petroleumproducts loading fee will be $150 per load until state reserves reach 5 percent; • Delays the five-year phased reduction of corporate income tax for two years, and; • Imposes a new weight-distance identification permit fee of a flat $55 per vehicle. The Governor had requested that the Legislature in Special Session consider legislation providing for comprehensive tax reform which would have significantly broadened the existing gross receipts tax base, provide relief from business to business tax pyramiding, and lower the overall gross receipts tax rate. HB 8 (Special Session), introduced by Representative Jason Harper, had as its purpose to accommodate those goals. The 430 page bill was not enacted by the Legislature as it was thought to be too complex to consider during a special session. Instead, the Legislature approved $400,000 to be utilized to conduct a tax reform study, the findings of which will be submitted to the 2018 Legislature. Congress: The U.S. House in June passed the Financial CHOICE Act by a vote of 233 to 186. The 600 page bill introduced by Com- mittee Chairman Jeb Hensarling is aimed at reforming parts of the Dodd-Frank Act (DFA) supervisory regime and providing regulatory relief for banks. Key provisions of the act include: • “Tailor Act”. Financial regulators would be required to “tailor” regulations to fit an institution’s business model and risk profile. • “Exam Bill”. An Office of Independent Examination Review would be established to permit appeals of exam- ination decisions without fear of reprisals. • A safe harbor from the QM rules would be provided for mortgages held in portfolio. • Relief would be provided from overly broad “points and fees” requirements for purposes of complying with the Ability-to-Repay/QM rule. • Section 1071 of the DFA that requires the CFPB to col- lect and report data on small business lending would be repealed. • Changes to the definition to what constitutes a “high- cost mortgage” would make it possible for more lenders to better meet the borrowing demands for relatively low dollar loans. • The Fed’s Small Bank Holding Company threshold would be raised to cover institutions with less than $10 billion in consolidated assets. • A safe harbor would be created from the mortgage escrow requirements for smaller financial institutions. • Highly rated and well-capitalized banks would be authorized to file short form call reports in the first and third quarters of every year. • Smaller depository institutions would be exempt from HDMA reporting and record-keeping requirements. • “Choke Point”. The regulatory agencies would be prohib- ited from forcing a bank to terminate customer accounts unless there is a material reason to do so. • “The Volcker Rule” would be repealed. • The CFPBwould be renamed the Consumer LawEnforce- ment Agency (CLEA); made subject to the appropriations process; and, although it would still be governed by a single director, that person would be removable at the will of the President. • The CFPB would not have supervisory authority. The CFPB’s enforcement authority would be limited to en- forcing only certian enumerated consumer laws and it would not have any authority over Unfair, Deceptive or Abusive Act and Practices. Beginning two years after enactment, courts would no longer have to defer to the agency’s interpretation of the DFAwhen they conflict with the interpretations of other agencies. • TheCFPBandSECwouldnot be able toprohibit arbitration. • Several provisions are intended “to end Too Big to Fail,” including repeal of DFA’s alternative orderly liquidation provisions. This would be replaced by a special chapter in the Bankruptcy Code for failing financial institutions. • The FDIC, FHFA, NCUA, OCC and the non-monetary policy related functions of the FED would be subject to the Congressional appropriations process. • Congressional approval would be required for major rules by the financial regulators to go into effect and a cost-ben - efit analysis would be required for most rulemaking. • Enhanced penalties would be applied in cases in fraud and deception. Among other things, this includes raising statutory caps for serious securities law violations, tripling the SEC fines where penalties are tied to illegal profits, increasing fines for insider trading and increasing max - imum fines for violations of FIRREA involving financial institutions. • Unfortunately, the repeal of the Durbin Interchange amendment was not included in the CHOICE Act. It is not clear what action, if any, the Senate will take concern- ing the Financial CHOICE Act. Many legislative insiders suggest that the Senate is likely to incorporate several of the regulatory relief measures found in the CHOICE Act in a Senate “economic growth” bill, but only time will tell. n The bill also creates a rainy day fund by distributing revenue in excess of annual five-year average for the oil and gas emergency school tax to the tax stabilization reserve and repealing the taxpayers dividend fund, such that the balance in the tax stabilization reserve may accumulate overtime. n Executive Vice President’s Message  continued from page 9