A comprehensive update of Nebraska’s banking laws was considered Jan. 23 by the Banking, Commerce and Insurance Committee.
Gothenburg Sen. Matt Williams, sponsor of LB140, said the bill is the result of a year of work by state senators, banking industry representatives and the state Department of Banking and Finance.
Stakeholders met monthly, he said, in order to review existing laws and suggest changes that would reduce regulatory complexity while still protecting consumers and preserving public confidence in Nebraska’s banking industry.
“To our knowledge, no comprehensive review and update to the current Nebraska Banking Act has occurred since its enactment in 1963,” Williams said, adding that the stakeholders involved had an overriding rule for the working group.
“We all came to the table with the idea of working together, and we agreed on the front end that the only provisions that would be included in LB140 would be those that were mutually agreed upon by all [parties],” he said.
Among other provisions, the bill would:
• allow a minor to open and maintain a safe deposit box;
• allow electronic filing of bank fidelity bonds with the state Department of Banking;
• require banks that employ a mortgage loan originator to register that employee with the Nationwide Mortgage Licensing System;
• allow a bank to acquire the stock of another financial institution if the transaction is part of the merger, consolidation or acquisition of assets of the other institution;
• authorize an increase in the maximum number of a bank board of directors from 15 to 25 and require that a bank president be a member of the board;
• prohibit bank-affiliated individuals from being paid a higher rate of interest on deposits than paid by the bank for similar deposits and provide that a violation is a Class IV felony; and
• allow a bank, in a state of emergency, to open a temporary office to conduct business for up to 30 months, or allow a mobile branch to serve as a temporary emergency branch office.
The bill also would repeal obsolete sections of the state’s banking laws.
Mark Quandahl, director of the state Department of Banking and Finance, testified in support of LB140 and addressed specific provisions outlined in the 143-page bill.
“As the working group was reviewing the laws relating to emergencies, two of our banks – Wahoo State Bank and First Central Bank in Cambridge – had very real emergencies when fires destroyed their main offices,” he said.
The department discovered that existing laws were inadequate in regard to authorizing the banks to immediately establish temporary locations, he said, and LB140 would address those issues.
Also testifying in support was Robert Hallstrom of the Nebraska Bankers Association. He said the bill reflects best practices and incorporates many necessary updates.
“Many of the provisions, as director Quandahl has noted, were technical in nature,” he said, “but there are substantive provisions that will be beneficial both for the financial institutions and the customers that we serve.”
No opposition testimony was offered and the committee took no immediate action on the bill.