March Sacramento Update

February 21 was the bill introduction deadline in Sacramento, setting the stage for the 2025 legislative session. Multiple bills have been introduced that could impact community banks, including an interchange fee prohibition and the creation of a free state bank account for Californians. CCBN will be working in opposition to these onerous proposals this year, which specifically are:

-AB 1065 (Ortega), which would enact the Consumer Inflation Reduction and Tax Fairness Act to require that the calculation of interchange fees charged by a issuer, a payment card network, an acquirer bank, or a processor not take into account tips or certain state and local taxes and fees. This will disproportionately disadvantage state chartered banks and credit unions, particularly because it will likely be federally preempted. AB 1065 is sponsored by the California Grocers Association. CCBN is working with others in the banking and payments space in opposition to the bill.

-AB 1365 (Garcia), which would establish the CalAccount program which would provide all Californians access to free, voluntary, zero-fee, zero-penalty, federally insured bank accounts. The CalAccount Commission would administer the program and would contract with financial institutions to ensure access to ATMs/locations where accountholders could deposit funds. Like AB 1065, this bill will disproportionately impact community banks, which need checking account deposits to make loans to consumers and small businesses.

Mitigating elder adult financial abuse continues to be a priority for the Legislature. Bills in this space include:

-AB 83 (Pacheco), which currently requires companies to submit an elder abuse prevention plan to DFPI but will be amended to allow financial institutions to take certain actions when they suspect an elder or dependent adult is at risk of being a victim of fraud.

-AB 871 (Stefani), which would require a financial institution to provide annual training to its mandated reporters on how to report suspected financial abuse of an elder or a dependent adult to both local and federal authorities. It would also require a financial institution to share information on reporting mechanisms with clients immediately upon discovering potential financial abuse and would require the financial institution to encourage clients to submit complaints within 24 to 48 hours.

Although the bill introduction deadline is behind us, there are multiple “spot”, or placeholder bills, that do not make any proposed changes to law. We will see another round of new proposals this month as these spot bills are substantively amended. Policy committee hearings are also ramping up in March, so the bulk of the real work this session is just beginning.