By Amy Heaslet, Executive Vice President/General Counsel, Tennessee Bankers Association
With the April 28th adjournment of the second session of the 112th General Assembly, TBA concluded another successful year at the Capitol. Several key pieces of legislation mark our biggest victories, including providing for the transition away from LIBOR; updating the state’s trust laws; expanding the list of collateral for public deposits; and defeating efforts to limit interchange fees.
We owe much gratitude to the involvement and support of TBA members for each of our legislative wins this year.
One of TBA’s two bills this year was SB 2133/HB 2110, which recognizes the upcoming phaseout of LIBOR and allows for financial institutions to use SOFR as replacement rate in contracts without a fallback provision. Subsequently to this legislation passing, the U.S. Congress passed similar legislation, but TBA was one of a few states to proactively pass legislation in the event Congress failed to do so.
TBA’s second legislative initiative – SB 2166/HB 2353, which updates and amends our state’s trust laws, passed with unanimous support in the House and Senate. The legislation will ensure Tennessee remains one of the top three trust jurisdictions in the country. Significant credit for this success goes to the trust legislative committee, composed of representatives from commercial banks, trust companies and associate law firms working in the trust area.
After lengthy discussions on what laws could be amended to improve Tennessee’s standings in national trust rankings, the committee members spent countless hours working with TBA’s government relations team drafting the legislation and negotiating with other stakeholder groups. It was a laborious process, but their input was invaluable. Thanks to their volunteer efforts, Tennessee will remain a leading trust jurisdiction.
Among the key changes made by the trust legislation are allowing for the release of a trustee upon written notice to all beneficiaries and no objection from any beneficiary; permitting decanting of a trust by restatement of the original trust, which restatement would not require the re-titling of property held in the trust; removing annual reporting and fee requirements for special purpose entities; and extending the duration of voting trusts from seven years to any period of time as determined by the agreement creating the trust.
By working with state Treasurer David Lillard and his staff, TBA’s third major legislative success was to further expand the list of eligible collateral for public deposits to include SBA bonds, and clarify the Collateral Pool Board’s authority to vote to increase or decrease the pledge levels for members under certain circumstances. The legislation, which received strong support in both the Senate and House, is the culmination of a multi-year push by TBA to address challenges banks face when accepting public deposits. Legislation passed in 2021 reduced the minimum pledge level for Collateral Pool Member banks from 100% to 90% through 2026 and allows for cash to be pledged as collateral for all public deposits.
For a third year in a row, TBA defeated legislation from a coalition of retailers that would have prohibited interchange fees from being charged on the sales tax portion of retail transactions in Tennessee. Thanks to strong opposition and outreach from Tennessee bankers, the retailers lacked support for their legislation in both the Senate and House and withdrew their bills.
The retailers’ coalition has shifted their focus on reinstating vendors comp that would compensate merchants for their efforts in collecting and remitting the sales tax to the state. Vendors comp was eliminated in the state about 20 years ago during budget shortfalls, but the General Assembly in the final days of session approved a one-year reinstatment of vendors comp for retailers with a maximum benefit of $25 per location.
With the adjournment of the 2022 session, TBA’s government relations team will begin working on the 2023 legislative agenda and focus on supporting pro-banking candidates in the November elections. With more than 20 open seats in the Senate and House combined, I encourage you to send any feedback you have on these races. Your input is critical to ensuring TBA supports the best candidates for the industry and our work to maintain the strength of the banking industry at the state level.