Oklahoma Bankers Association We make bankers better!
Happy new year and welcome to 2023!
Last year was a whirlwind as the elections took center stage and legislative battles were a plenty. This year looks promising, if for no other reason there aren’t any major elections.
Still, there will be plenty of talk about who is and who isn’t a viable candidate for the 2024 presidential election. I assume by the end of the year, we’ll have a good idea of who will be the significant candidates for president.
Like I mentioned earlier, 2022 was a year primarily defined by state and national elections. Let’s take a brief look at where we sit today in terms of the U.S. Senate and the House of Representatives.
When all the elections were finally resolved, the Democrats increased their advantage in the Senate to 51-49. We all thought the numbers were set and were able to know exactly what we are dealing with in the Senate.
As is life in politics, however, just when you think you have it figured out, something comes out of the left field to change everything. Senator Kyrsten Sinema (D-Ariz.) declared she was changing her political affiliation from Democratic to independent. The senator will still caucus with the Democrats even though she will now be an independent.
She will be joining Sen. Bernie Sanders (I-Vt.) and Sen. Angus King (I-Maine) who are independents that caucus with the Democrats.
I firmly believe that Sen. Sinema only made this change for her upcoming election. She understood the balance of power wouldn’t change with her becoming an independent, but it would give her better odds to be re-elected.
When the 118th Congress is sworn in on Jan. 3, the Republicans will control the agenda of the House. They will have a 10-seat advantage, 222-210. There is still one vacancy: The 4th congressional district in Virginia will be decided in a special election in 2023. Donald McEachin (D-Va.) won the general election on Nov. 8, and passed away on Nov. 28.
Jan. 3, is going to be a big day in the House as members are sworn in and then they immediately start the process to vote on the next speaker. This is where the fun begins. The battle for the highest position in the House has been underway for weeks. Current house minority leader Kevin McCarthy (R-Calif.) is the front-runner to win the post, but he is currently short of the 218 votes he needs. Because of the razor-thin margin between the two parties in the House, McCarthy can only afford to lose four votes. As we sit here today, there are at least four Republicans who have publicly stated they won’t support McCarthy for speaker.
If McCarthy doesn’t win on the first vote, they will continue to vote until a speaker is chosen. Should that occur, it would be the first-time multiple votes were needed since 1923.
In my opinion, Leader McCarthy will be our next speaker, the only question is how many votes will it take. I’ll be interested to see what deals and moves were made that ultimately lead to him winning the highly coveted role.
The period between the election and the start of the new Congress when there is a change in leadership of one particular chamber is know as a lame-duck session. Lame-duck sessions can be very scary, when the current party in power usually tries to get legislation passed that won’t be on the agenda of the incoming party.
There were several issues that caused us concern in the lame-duck session, fortunately they didn’t move and most likely won’t be part of the Republican agenda in the upcoming house. Durbin 2.0, also known as the Credit Card Competition Act, was at the front of the list. This bill would’ve been devastating to banks and consumers. We all know what the original Durbin bill did to debit cards, and this would’ve had the same impact on credit cards.
Democrats in the Senate tried multiple times to attach this bill to the NDAA (National Defense Authorization Act). The NDAA is the main funding source for the military and everyone knows it will pass, so if you can attach language that has nothing to do with the NDAA upon it, you know it will pass and become law. Fortunately, there wasn’t an appetite for attaching the Durbin 2.0 language, so it peacefully sat on the sideline and never advanced.
Another important event that took place during the lame-duck session that didn’t involve a piece of legislation was the confirmation of three board members to the FDIC. Acting Chairman Marty Gruenberg was confirmed by the Senate by a vote of 45-39. Also confirmed by the Senate to sit on the board of the FDIC were Travis Hill, who will serve as vice chairman, and Jonathan McKernan. Both Travis and Jonathan were Republican nominees. Gruenberg first joined the FDIC in 2005 and chaired the agency from 2012 to 2018.
Feb. 6 is the official start to the 59th Oklahoma State Legislature. Gov. Stitt will kick off this year’s legislative session with the annual State of the State address.
Not only are there a lot of new members in the legislature, there are newly elected individuals who will be serving in important roles. All three of these individuals were elected in November, and it’s the first time for all of them to be serving in a position to which they were elected in a statewide vote.
Gentner Drummond will be Oklahoma’s new attorney general. While the OBA rarely has issues that make it to the AG, it’s good to know we have a banker there who understands your business. Todd Russ is our new state treasurer. Todd has been a state representative for 13 years, and as a former banker, he understands our issues. In the last couple of years, the state treasurer’s office has been more involved in the policy side of government. The third individual is Ryan Walters. Ryan is the new superintendent of public instruction. In my 23 years at the OBA, we’ve never had an issue where we interacted with the superintendent of public instruction. The reason I wanted to bring this position to your attention is it has become politicized in recent years. This agency and its new director are more aggressive than their predecessor and will likely attempt to make big changes in education this session. Should this agency do what we think they might do policy-wise, it could change all the dynamics of this upcoming session and we could indirectly benefit from those actions. Time will tell, but we definitely wanted to bring it to your attention.
At the time of publishing for this edition of the Oklahoma Banker, there are only 100 bills available online for our review. We know there were close to 3,800 requests for bills, so with that being said, we will have a lot of reading to do in a short amount of time.
The legislature, as a whole, will be tackling a myriad of issues, some we know about and some that haven’t surfaced yet. Tax reform, education funding, workforce development and strengthening the family are just a couple of issues that we know will be front and center. Guns and marijuana have become staple issues at the Oklahoma legislature and I don’t foresee it being any different this year.
The state should have a surplus of funds this year, which always makes it exciting around the capitol. In my opinion, school choice is going to be the most controversial issue of the session. Numerous members, both old and new, made this the key issue of their 2022 campaigns. Both the governor and newly elected superintendent of public instruction made this issue a focal point of their campaigns. Last year, the school choice bill barely made it out of the Senate and wasn’t even considered in the House. Look for this bill to at least have an opportunity to be heard in both chambers.
The OBA will be involved in several issues this session, some we know about and some we will discover over the next couple of weeks. Below are some issues that we know we will be involved in:
UCC update
The Uniform laws commission has come out with their 2023 update. These are laws passed in every state legislature to ensure certain laws are uniform across the country. This bill won’t be controversial at all, it will just take a lot of explaining and education.
ELT
On July 1, 2022, Oklahoma became a title-holding state. Oklahoma decided to do it a little different than other title-holding states, though. In Oklahoma, we are technically a dual title-holding state. The lienholder has the option to either hold the title at the bank or they can file it digitally and allow the state to hold the title.
The problem is, the state has yet to approve a vendor to handle the digital side of the agreement. We are working with several groups to craft legislation that would keep Oklahoma a title-holding state, the difference would be that we would be digital only. We have a couple of bankers who have locations in states that are all digital and they are working to make sure the Oklahoma system works as well as the other states.
ESG
Last year we fought all the way to the last second to keep a terrible bill from passing.
This bill was drafted as a gun bill, but it had far-reaching consequences. The bill would have prohibited any financial institution that discriminated against the gun industry from having the ability to have a state contract.
We feel very strongly this bill is terrible not only for banks, but for the state as a whole. It would’ve allowed government to dictate who a private business can and can’t do business with.
Not only is it terribly intrusive, the definition of discrimination doesn’t help at all. If a bank chose not to do business with the gun industry because the customer has terrible credit or doesn’t have a good business plan in place, is that discrimination? We will be all over this bill again this year, and will most likely be reaching out to you this session for your help.
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It’s going to be a great year, and we have opportunities to do some great things. We will need your help along the way, though, as having so many bankers involved in the process is key to our success. In our next issue, we will have seen all the legislation that is proposed at the state level and will have a full list of all the measures that could have an impact on your bank.