Session Review: Banking, Commerce and Insurance
A comprehensive update of Nebraska’s banking and securities laws was approved this session, along with changes to insurance regulation and commerce promotion.
Introduced by Gothenburg Sen. Matt Williams, LB140 makes a number of changes to the laws that govern the state’s banking industry.
Among other provisions, the bill:
• allows a minor to open and maintain a safe deposit box;
• allows electronic filing of bank fidelity bonds with the state Department of Banking;
• requires banks that employ a mortgage loan originator to register that employee with the Nationwide Mortgage Licensing System;
• allows 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;
• authorizes 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;
• prohibits bank-affiliated individuals from being paid a higher rate of interest on deposits than paid by the bank for similar deposits and provides that a violation is a Class IV felony; and
• allows a bank, in a state of emergency, to open a temporary office to conduct business for up to 30 months, or allows a mobile branch to serve as a temporary emergency branch office.
The bill also repeals obsolete sections of the state’s banking laws and includes provisions of three additional bills:
LB196, introduced by Omaha Sen. Joni Craighead, which provides an annual update of statutory reference dates to align state financial institutions with their federal counterparts;
LB454, introduced by Omaha Sen. Brett Lindstrom, which allows credit unions in Nebraska to opt out of licensing of its executive officers by the state Department of Banking and Finance; and
LB341, also introduced by Lindstrom, which clarifies provisions relating to the license suspension or revocation of an executive officer who is acting in an unsafe or unauthorized manner or endangering the interests of stockholders or depositors.
LB140 passed on a 48-0 vote.
Senators also updated the state’s laws regarding securities. LB148, sponsored by Columbus Sen. Paul Schumacher, is based on recommendations from a 2016 interim study and makes numerous changes to the Nebraska Securities Act.
Current law excludes from the securities act individuals with no place of business in the state who effect transactions exclusively with other broker-dealers, specified types of financial institutions and other institutional buyers. LB148 adds credit unions to the list of entities to which sales can be made without triggering registration requirements.
Among numerous technical changes and updates, the bill also:
• updates references to federal securities acts and regulations;
• authorizes the director of the state Department of Banking and Finance to issue a notice of abandonment if an applicant for registration fails to respond to a notice within 100 days; and
• authorizes the department to deny, suspend or revoke the registration of a broker-dealer, issuer-dealer, agent, investment adviser or investment adviser representative if the director finds that such person meets any one of 12 listed criteria.
The bill also included provisions of Schumacher’s LB187 that increase from $250,000 to $750,000 the cap on proceeds from all sales of securities by an issuer under a registration exemption for small offerings. The capped amount could be increased in the future and a security issued through an exempted transaction will not be considered a security for purposes of determining professional malpractice insurance premiums.
The bill passed on a 49-0 vote.
Also introduced by Schumacher and passed 41-4, LB72 prevents a city or village with a defined benefit retirement plan from filing for bankruptcy unless the plan’s funded ratio reaches a certain percentage. The ratio will increase incrementally from approximately 52 percent for any petition filed between 2020 and 2023 to 90 percent after Jan. 1, 2038.
The bill allows a city or village without a pension plan to declare that its general obligation bonds would be equally and ratably secured by property taxes levied from year to year by the city or village. Those bonds would have a first lien on the property taxes levied.
The Legislature approved a bill that provides financial assistance to the state’s bioscience industry.
LB641, introduced by Sen. Adam Morfeld of Lincoln, creates the Bioscience Innovation Program under the Business Innovation Act. The bill creates a fund to provide financial assistance to bioscience-related businesses in the state.
Funding for the program will come from loan repayments to the Nebraska Progress Loan Fund as authorized by the federal Small Business Credit Initiative Act. The program will terminate after funds are exhausted.
The bill includes provisions of LB230, introduced by Sen. Dan Watermeier of Syracuse, that create a task force to identify the state’s economic development priorities. The task force will meet at least every three months when the Legislature is not in session.
Senators voted 31-5 to pass the bill.
A bill that prohibits insurance providers from excluding coverage for a service based solely on its deliverance through telehealth also was passed this session.
LB92, sponsored by Seward Sen. Mark Kolterman, requires health insurance companies to cover any service provided via telehealth if the service is covered for an in-person consultation. The bill also removes an existing Medicaid coverage restriction for children if a child has access to services within 30 miles of his or her place of residence.
The bill does not apply to policies that provide coverage for a specified disease or other limited-benefit coverage. LB92 passed 49-0.
Bills that would increase regulation of payday lenders and auto insurance requirements remain in committee.
LB194, introduced by Omaha Sen. Tony Vargas, would limit the amount of interest that could be charged on a delayed deposit loan – often called a payday loan – to 36 percent and would place additional restrictions on the industry.
LB643, introduced by Omaha Sen. Bob Krist, would double the amount of liability insurance that Nebraska motorists would be required to carry on their automobiles.
