Happy New Year. We enjoyed a brief respite for the holidays, but we’re back at it. The State Legislative session started in mid-January and runs through mid-May. Some of the issues we anticipate addressing during this session include:

1. The Colorado Department of Regulatory Agencies (DORA) recently released their 2023 Division of Banking Sunset Report. The second recommendation in the report would authorize a credit union to purchase the assets and liabilities of a state bank. This recommendation does not belong as part of the Sunset process. This is a significant change in policy and should be addressed separately from the sunset process. CBA, in partnership with Independent Community Bankers of Colorado (ICBC), sent a letter to DORA and Governor Polis advising of our opposition to the “Buy a Bank” recommendation in the Sunset Report. We will continue to educate and work with the bill sponsors to have the recommendation omitted from the final legislation. CBA has stated for the record that we will oppose Sunset if the recommendation remains.
   
   
2. A bill proposed to require a Right of First Refusal to local government/municipalities prior to the sale of a multi-family unit to preserve or expand affordable housing options. Working with the House bill sponsor, CBA was initially neutral on the legislation. Amendments added in the Senate impacted title insurance and lending opportunities on multi-family properties. CBA modified its neutral position to oppose it and requested a veto by the governor, which was granted. We do expect the bill to return in the 2024 session. We have an early draft of the bill — it has a Right of First Offer (ROFO) and Right of First Refusal (ROFR) component. CBA anticipates changes to the draft prior to introduction during the session.
   
   
3. As part of the state budget, Governor Polis has set aside $137 million for housing: more places to live near transit, affordable housing tax credits, development of accessory dwelling units (ADUs) and repurposing old infrastructure. ADUs would include incentives to municipalities to offset fees and loan loss reserves to help homeowners with financing costs. The governor’s office is trying to figure out the structure to include the PACE loan program as well. CBA has educated the governor’s staff on the limitations of PACE and lien priority.

At the federal level, we will continue to work on the following issues:

1. Interchange: We have concerns about the Federal Reserve Board’s proposed reduction in debit card interchange fees from approximately 22 cents to 17.5 cents. CBA has written to Federal Reserve Bank President Schmid and is asking banks to submit comment letters. Comments are due by Feb. 12.
   
   The cuts in checking account revenue for covered banks would be significant, and many of those banks will have to increase consumer fees for checking accounts and ATM transactions. Merchants, on the other hand, will have no obligation to pass their cost savings on to consumers.

   Potential consequences of the proposed reduction also include:

   • The need for banks to increase borrowing costs and fees for other services, which will negatively impact customers who may not qualify for credit card products or other alternatives;
     
   • The discontinuation of a bank’s lowest-margin products, thus reducing access to affordable basic banking services for low- and moderate-income individuals and families; and
     
   • The financial pressure on banks approaching the $10 billion threshold may lead to a significant increase in bank consolidations.
     
     
2. Credit Card Routing Bill: Sens. Roger Marshall (R-KS) and Dick Durbin (D-IL) introduced the Credit Card Competition Act in 2023, which would extend Durbin’s network mandates to credit cards for card issuers with assets over $100 billion. Reps. Peter Welch (D-VT) and Lance Gooden (R-TX) have introduced a House version of the deeply flawed and harmful Credit Card Competition Act. Both bills failed to gain traction and any additional cosponsors as standalone proposals, so their authors attempted to add the legislation as an amendment to a must-pass piece of legislation like the omnibus spending bill. Senator Marshall has vowed to attempt to add the bill to any must‑pass legislation. We anticipate this legislation will be introduced again this year.
   
   
3. Overdrafts: CFPB Director Chopra announced a new push to eliminate or greatly reduce the ability to charge overdraft fees. The agency already targeted NSF fees.
   
   
4. Capital Increases: FDIC Chair Martin Gruenberg called for stricter capital requirements for midsize banks. He stated this would apply to all banks $100 billion and over. Rules are not yet drafted. We are working with the American Bankers Association and other states to respond and express bankers’ concerns.

Lastly, please join us at our annual Legislative Briefing, which is scheduled for March 6 at the History Colorado Center. Take advantage of this unique opportunity to engage with elected officials in a meet-and-greet setting. Attendees will not only gain valuable insights into the issues being addressed in the legislative session but will also have a chance to build relationships with legislators to foster collaboration and ensure their voices are heard in shaping policies that impact the banking industry. This event is free for CBA bank members. Space is limited, so please register soon. Questions? Contact Lindsay at lindsay@coloradobankers.org or (303) 825-1575.