Omnibus banking bill clears first round

A measure that would make a number of changes to Nebraska banking laws advanced from general file Jan. 27.

LB717, introduced by North Platte Sen. Mike Jacobson at the request of the Nebraska Department of Banking and Finance, is the annual administrative update for the department.

Among other provisions, the bill would harmonize state law with federal law and preserve the “wild card” powers of state banks, credit unions and savings associations.

The measure also would provide a number of consumer protections, such as requiring a “net tangible benefit” analysis for borrowers financing installment or mortgage loans and authorizing the emergency closure of financial institutions in the event of a cybersecurity breach.

In addition, LB717 would expand the definition of financial institutions to include credit unions under the Nebraska Financial Innovation Act, broaden the scope of controllable electronic record kiosks and update lending limits by increasing the usury rate exemption cap from $25,000 to $100,000.

Jacobson, committee chairperson, said the annual cleanup bill would make certain that Nebraska banking institutions are not operating under obsolete federal regulations or rules that have changed over the past year.

“These changes ensure that our state-chartered institutions remain competitive, secure and aligned with federal regulatory standards,” he said.

Jacobson offered an amendment, adopted 38-0, that he said represents a compromise between the department and small Nebraska payroll processors. The amendment would provide an exemption from the Nebraska Money Transmitters Act for payroll processors that:
• have fewer than 25 full-time employees;
• provide services for fewer than 50 clients residing in Nebraska;
• have not been convicted of or pled guilty to a felony;
• have never had a financial services or other professional license revoked; and
• do not engage in the business of money transmission.

“This amendment … is a simple, pro-small business adjustment that maintains high standards while [protecting] main street service providers from unnecessary red tape,” Jacobson said.

Following adoption of the amendment, lawmakers voted 41-0 to advance LB717 to select file.