By Amy Heaslet, Executive Vice President/General Counsel, Tennessee Bankers Association
With two special sessions of the Tennessee General Assembly recently completed, Tennessee has made significant strides to ensure our state’s future for long-term recovery and success. Both sessions saw approval of measures that will benefit—either directly or indirectly—Tennessee banks, their customers, and their communities.
The first special session convened on October 18 upon Governor Lee’s call to address funding, buildout, and oversight of a $5.6 billion investment from Ford Motor Company and battery maker SK Innovation in the Memphis Regional Megasite. Lawmakers were limited to only addressing issues related to Blue Oval City—the planned name for the project—and specifically approving an incentive package that included a $500 million grant for Ford and SK Innovation as well as funds for road work; building and demolition work; and the construction of Tennessee College of Applied Technology at the site.
For nearly 15 years, the massive megasite sat vacant and has been a sore subject for bankers and West Tennesseans. During the 2018 elections, one of the most asked questions from West Tennessee bankers to gubernatorial candidates was, “What is your plan for the megasite?”
That question was finally answered with the announcement of the state’s deal with Ford—the largest investment in Tennessee history—and it will serve as a crowning jewel of Governor Lee’s administration. From the 5,800 jobs it will bring to the educational and economic development potential—there is no doubt this will transform West Tennessee.
The second special session, convened the week following the session on the Ford deal, was unique in that it marked only the third time in Tennessee history that lawmakers—not the Governor—called themselves together for a special session. After garnering support from two-thirds of the Senate and House, leaders issued the call for session, which included COVID-related matters they were wanting to address for some time. At the core of the second session was addressing vaccine mandates and mask mandates in schools. But, importantly, they also took up the issue banks faced in collateralizing funds from the American Rescue Plan.
Getting to this point was not easy. Since the ARP took effect in March 2021, we have been working with banks to understand the challenges they have from pledging 100% collateral against these deposits. It quickly became clear that we needed to bring some relief to banks or they would face accepting the deposits at a loss; or, even worse, charging their depositors to accept the funds or turning them away.
Our priorities were to decrease the pledge level to 90% for Collateral Pool members currently pledging at 100%, adding cash as collateral, and loosening the restrictions on out-of-state bonds.
We had all but resigned ourselves to accepting that this would have to wait until 2022 because changing the pledge levels would require rulemaking, and expanding the types of collateral would take legislation being passed during regular session that begins in January 2022.
But with the announcement of a special session on COVID-related matters, Senate and House leadership included this issue in their call for special session. As a result, TBA worked with the General Assembly and successfully passed legislation to reduce the pledge level to 90% for certain Collateral Pool members through December 31, 2026, and also added cash as eligible collateral. In January when regular session resumes, we will make another push to further expand the types of collateral and loosen the restrictions on out-of-state bonds.
We are grateful for the support legislative leaders showed our industry by taking up this critical issue, and we are also grateful for the advocacy our members had on this issue throughout the summer. Your voices were heard and because of that, Tennessee bankers will now be able to better serve their communities.