Advocating for Community Banks

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2024 Legislative Successes 

September 30^th was Governor Newsom’s deadline to act on the 1,206 bills sent to his desk this year. 1,017 were signed and 189 were vetoed, resulting in a veto rate just under 16%, slightly above the 15% average seen over the past decade. Newsom acted on several bills that would have had a significant negative impact on community banks if not for CCBN’s advocacy. Overall, CCBN had a successful year and was able to either mitigate or kill the overwhelming majority of the bills we opposed.  We also supported legislation to promote financial literacy and to keep local agency funds in the community.

Stopped a Proposal to Make Banks Liable for Elder & Dependent Adult Abuse

One of our biggest victories this year was the veto of SB 278 by Senator Bill Dodd (D-Napa), which would have required financial institutions to establish “emergency financial contact” programs for elder and dependent adults and requires financial institutions to delay transactions by these accountholders by three days if there is a reasonable suspicion of financial abuse.  Due to concerns regarding preemption for federally chartered banks, CCBN secured an amendment to SB 278 at the end of the legislative session that specified that if the bill is found not to apply to federally chartered banks, it won’t apply to state-chartered institutions either.  Although this amendment brought us to a neutral position, we still had concerns with the bill and its practical impact on community bank customers.   

Governor Newsom vetoed the bill due to concerns with the 3-day hold and seniors’ access to their funds, as well as concerns with the enforcement provisions.  Although the bill is dead for now, the sponsors may be inclined to reintroduce it in a future session.  CCBN and other industry stakeholders will be on the lookout for a reintroduction and will proactively engage if a bill resurfaces.  Because Senator Dodd is termed out, the sponsors would need to secure a different author.

Obtained Amendments to Make Mortgage Assumption Bill Workable for Lenders

AB 3100 by Assemblymember Evan Low (D-Campbell) requires residential conventional mortgages with multiple borrowers to include provisions to allow for any of the existing borrowers to buy the property interest of another borrower by assuming the seller’s portion of the mortgage if the assuming borrower qualifies for the underlying loan. The goal of the bill is to assist parties in a divorce who want to assume a mortgage without having to go through the refinancing process. CCBN and other financial services stakeholders worked with the author to secure an amendment requiring the assuming borrower to qualify for the loan.  We also removed provisions in the bill that would have created additional disclosure requirements for lenders. 

Mitigated Debt Collection Legislation

The Governor signed SB 1286 by Senator Dave Min (D-Irvine) this year, which expands the scope of the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) to cover certain commercial debt, providing certain debtors with protections from harassment and other prohibited collections activities.  CCBN and other industry stakeholders had concerns with this bill given that consumer and commercial debt are very different. Although we remained opposed to the bill based on precedent, we worked with other industry stakeholders to secure amendments to the bill that significantly narrowed its scope, reducing covered commercial debt from $15 million to $500,000, delaying implementation to July 1, 2025 and excluding corporations and LLCs from the bill.

Supported Financial Literacy Legislation

CCBN supported several bills this year that would have increased financial literacy education requirements for California’s K-12 students.  Oftentimes these types of bills stall but two bills that CCBN supported in this space were signed by the Governor. The first was AB 2927 by Assemblymember Kevin McCarty (D-Sacramento), which will require a semester-long personal finance education course available for all California high school students by the 2027-28 school year and make personal finance a graduation requirement starting with the 2030-31 graduating class. A similar measure qualified for the November ballot but due to the enactment of AB 2927, proponents agreed to withdraw that measure. 

CCBN also supported AB 1871 by Assembymember Juan Alanis (R-Modesto), which adds personal financial literacy to the course of study in social sciences for grades 7 through 12.  Governor Newsom signed AB 1871 on September 24.  

Supported Legislation to Maintain Flexibility for Local Agencies and Banks as They Work Together to Manage Local Agency Funds

CCBN supported AB 2618 by Assemblymember Phil Chen (R-Brea), which was signed by the Governor on September 14 and sponsored by the California Bankers Association.  This bill will extend until January 1, 2031 the authority for a local agency to invest up to 50% (rather than 30%) of its surplus funds in deposits at a commercial bank, savings bank, savings and loan association, or credit union. Depository institutions that use reciprocal deposits as a means to collateralize against local agency deposits are community banks operating within the geographical region of the local agency. CCBN supported AB 2618 because it will maintain flexibility for local agencies and banks as they work together in managing local agency funds and in serving their communities. By keeping these funds in the community, rather than forcing local agencies to invest in the stock market, banks and credit unions can lend back into the community and local agencies have quick access to the funds in the event of a liquidity crisis.

Looking Ahead

2024 was the final year of the 2023-24 two-year session.  Although SB 278 was vetoed this year, elder financial abuse remains a priority for the Legislature, so CCBN will continue to educate legislators regarding the role community banks play in combatting elder and dependent adult financial abuse.  Democrats’ will retain their supermajorities in the legislature after the November election, and proposals that harm the business community, including community banks, will likely be introduced in 2025. There was a bill this year regulating overdraft fees at credit unions, so there is the potential for legislation limiting the use of ODFs in California’s other financial institutions.

There will be significant turnover in the Legislature after the election, with 35 new members being sworn into the Senate and Assembly. CCBN will continue to be actively engaged in Sacramento next year to protect the interest of community banks and foster relationships with new and existing lawmakers and regulators.