As the video and song depict, it is a long journey for a bill to become a law- and it all starts with an idea.  With this in mind, we at CBA thought it would be very informative an educational to outline the timeline and process involved to turn SB157 into law here in Georgia.  On our web site, we have posted a link with a rolling time line.  Please note that the process started back in 2016- with an idea that a community banker shared with CBA’s Chief of Staff and EVP of Government and Regulatory relations Mrs. Lori Godfrey.  https://www.cbaofga.com/sb-157.html   As you can see, the timeline depicts a long journey filled with innumerable challenges and obstacles.  Turning an idea into a bill is hard enough let alone guiding it through the gauntlet known as the legislative process.  Frankly, it should be a challenging process!  CBA fought long and hard to make SB157 and we are so pleased and thankful to have secured unanimous passage in the entire legislature.  Moreover, we are extremely grateful Governor Kemp’s support throughout the process!
 
Please enjoy the timeline! Let us know if you have any questions.

ICBA held its’ annual Capital Summit April 28-May 1, 2019.  CBA’s delegation met with Senator Perdue’s staff, Sen. Isakson’s staff, and eleven Congressmen or their senior aides in an effort to advance regulatory relief.  ICBA’s Community Focus 2020 outlines the community bank agenda for regulatory relief.  During our visits, CBA’s delegation specifically discussed modernizing the Bank Secrecy Act, ending credit union and farm credit tax subsidies, enhancing customer data security, safe harbor for legal cannabis banking, and reforming the housing-finance system.  Click on each of the subjects to learn more about our discussions for each topic.  In addition, our CBA delegation discussed disaster relief that is needed in our state from the impact of Hurricane Michael.  Unfortunately, the disaster relief funds are tied up in political discussions and are not anticipated to be finalized in the near future.  We tried to provide anecdotal information from our bankers in Southwest Georgia.  We will continue to advocate for the need of disaster relief fund as soon as possible.  Our communities are anxious to start rebuilding and moving forward.             

Currency transaction report threshold: On May 8-9, Congressman Loudermilk took an active role in the Financial Services Committee’s markup of eight pieces of legislation, including a bill to reform the Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance regime. As you may know, he has sponsored a bill that would increase the BSA’s currency transaction report (CTR) threshold from $10,000 to $30,000, increase the suspicious activity report (SAR) threshold from $5,000 to $10,000 for depository institutions, and increase the SAR threshold from $2,000 to $3,000 for money services businesses.
 
The original BSA/ AML reform bill that was considered in the markup did not include any provisions to address these thresholds, so Congressman Loudermilk worked with Members from both parties to find common ground on the issue. It became clear that the SAR threshold is much more of a sticking point than the CTR threshold, so he proposed an amendment that would have phased in an increase to the CTR threshold for depository institutions over time from $10,000 to $20,000 and then from $20,000 to $30,000. The amendment also proposed a Government Accountability Office (GAO) study to analyze the usefulness of CTRs and whether the threshold should be raised, and a similar study on SARs.
 
Most committee members from the majority have long maintained that they will not support any threshold increases, so Congressman Loudermilk negotiated a compromise and withdrew his amendment. The compromise would (1) index the CTR threshold to inflation for depository institutions starting at the current threshold of $10,000, (2) require the GAO to study how to improve the usefulness of CTRs which Congressman Loudermilk proposed in his original amendment, and (3) require FinCEN to conduct a study on reducing SAR reporting burden, including the possibility of a shorter form SAR for known or trusted customers. The BSA/ AML reform bill ultimately passed the committee with these provisions included by a unanimous vote of 55-0. This is significantly less than what Congressman Loudermilk would like to do on the thresholds, and he will continue to find ways to advance his bill, but he views this compromise as a small step in the right direction. You can listen to his statements at the markup here and here.

ICBA issued a comment letter in response to the Consumer Financial Protection Bureau’s advance notice of proposed rulemaking for Property Assessed Clean Energy financing. In its letter, ICBA stressed the need to ensure these loans are subject to the same standards as other forms of consumer mortgage credit, especially when a consumer’s home is used as the collateral. Individuals who arrange PACE financing should also be subject to the bureau’s Mortgage Loan Originator Compensation rules and the Nationwide Multistate Licensing System licensing requirements, ICBA wrote.
 
PACE loans allow homeowners to fund energy-efficiency upgrades through an assessment on their property tax bill, which by law gives them the same priority over a first-lien mortgage as tax payments.

Read ICBA Letter

ICBA called on the FDIC to revise how it treats brokered deposits and related interest rate restrictions. In a comment letter on the agency’s comprehensive review of this area, ICBA said brokered deposits can be a stable source of funding and a cost-effective way for community banks to meet their funding needs. However, there is an undeserved stigma surrounding brokered deposits that needs to be dispelled, it said.
 
ICBA said the FDIC has too expansively interpreted the definition of “deposit broker” and too narrowly implemented statutory exceptions. This hinders community banks as they partner with third parties, such as federal or state agencies that use debit or prepaid cards to deliver funds to government program beneficiaries.
 
Further, the FDIC’s national rate restrictions on less-than-well-capitalized banks are out of step with the market, ICBA said. It called on the FDIC to raise and reform rate restrictions to ensure the current, faulty methodology doesn’t lead to a liquidity crisis of its own making or unnecessarily loop in well-capitalized institutions.

Read ICBA Comment Letter
Read FDIC Request for Feedback
Read More in Recent ICBA Op-Ed

This week, CBA’s priority bill, SB 157, was passed by the House by a unanimous vote of 168-0!  CBA has secured unanimous support vote for the bill throughout the entire legislative process—Senate Banking & Financial Institutions Committee, the full Senate, House Banks & Banking Committee and the full House.  All of Georgia’s legislators showed their understanding of the importance of providing an option for community banks to fairly compete with large, mostly out of state bank deposit gathering stores for local municipal deposits.  Now, the bill will go to Governor Kemp for signature.  We greatly appreciate Sen. John Kennedy (R), Macon and Rep. Dale Washburn (R), Macon, guiding the bill through this legislative process.      We are thankful for our partnerships with National Federation of Independent Businesses (NFIB), the Georgia Municipal Association (GMA), and the Association of County Commissioners (ACCG) in making this bill a possibility. 

Currently, Georgia’s community banks have nearly $4 billion of municipal deposits on their balance sheets.  By eliminating the pledging requirements by using a deposit placement service, the impact on liquidity will be substantial.  Moreover, community banks now have a level playing field to compete with large, out-of-state deposit gathering institutions for all municipal deposits.  CBA estimates that the total municipal deposit marketplace is $22 billion.  With an average loan to deposit ratio of 75%, Georgia’s community banks will be able to dramatically increase lending in their local markets thereby helping small businesses start and grow, funding homeownership as well as a variety of agriculture and consumer loans.  SB 157 will change people’s lives and all of us at CBA are proud, honored and humbled to have had the opportunity to impact the Georgia’s community banking industry in this most positive manner!

​HB 314 — Georgia Uniform Certificate of Title for Vessels Act by Rep. Ron Stephens (R), Savannah, was passed by the Senate with a vote of 46-2 on Thursday.  If the bill is signed by the Governor, then this will mean big changes for boats in Georgia.  Every vessel using the waters of this state shall be titled unless it is exempt from the numbering requirements.  Every outboard motor greater than 25 horsepower used to propel a tilted vessel shall be included in the vessel title.  Fees for numbering vessels for registration period of three years are outlined within the bill.  The effective date of this legislation will be July 1, 2020.  It is important to note that the additional titling requirements may impact the way your institution perfects its security interest in boats within the State of Georgia.  Assuming the bill is signed by the Governor, we would encourage you to review your policies with respect to making loans secured by boats to ensure that they remain adequate in light of the changes to Georgia law outlined in this bill.

PACE Financing Loans:  SB 162—Local Government by Sen. Matt Brass (R), Newnan, was presented in the House Energy, Utilities and Communications Committee on Thursday even though it was tabled at last week’s committee meeting; however, the contents of the bill relating to PACE (property assessed clean energy) Financing of disaster mitigation improvements and broadband services were completely stripped out of the bill.  While the bill number and title will look the same, the content of the bill was completely replaced and became a vehicle for another bill.  The content of the new bill substitute relates to short-term rentals.  
​
While the PACE Financing language was stripped, we do expect the author to continue working with CBA and other interested parties to craft language that would be acceptable to all parties for the next legislative session.

​The legislature completed days 36 through 39 of the session. Only one day left in this legislative session!  Tuesday, April 2nd is Day 40 of the legislative session or Sine Die.  What is Sine Die?  Sine Die is the term used to describe the last legislative day of the session.  This is the last day a bill can pass.  If a bill does not pass by the end of Day 40, then it will have to wait until the next legislative session.  A bill that passes the legislature does not automatically become a law.  The Governor has the chance to veto it.  If the Governor does not veto the bill, then it becomes law.  Most laws go into effect in Georgia on July 1st.   
 
New bill that CBA is tracking:
HB 694 – Dekalb County; Clerk of Superior Court by Rep. Billy Mitchell (D), Stone Mountain, was introduced in the House on Monday.  The bill requires that tax parcel identification number information be included on documents recorded in the real property records of said clerk; to provide for related matters; to repeal conflicting laws; and for other purposes.  This language is virtually the same as the bill passed last legislative session for Fulton County.  The bill was passed by the House with a vote of 152-5 on Thursday.    

Update to bills that CBA is tracking:
HB 70 — Guardian and Ward by Rep. Chuck Efstration (R), Dacula, was placed on the Senate Rules Calendar for a vote by the Senate for Day 39 or 40 of the legislative session.
 
HB 193 — Banking and Finance, relating to the savings promotion raffles offered by state-charted banks and credit unions was presented by Rep. Emory Dunahoo (R), Gainesville, was passed by the Senate with a vote of 51-2 on Friday.  The bill now goes to the Governor for signature.

HB 239 – Georgia Business Court by Rep. Chuck Efstration (R), Dacula, was placed on the Senate Rules Calendar for a vote by the Senate for Day 39 or 40 of the legislative session.

HB 288 – Superior Courts by Rep. Alan Powell (R), Hartwell, was placed on the Senate Rules Calendar for a vote by the Senate for Day 39 or 40 of the legislative session.

HB 307 — Abandoned Motor Vehicle Act by Rep. Alan Powell (R), Hartwell, was placed on the Senate Rules Calendar for a vote by the Senate for Day 39 or 40 of the legislative session.

HB 490 — Banking & Finance by Rep. Jason Ridley (R), Chatsworth, was placed on the Senate Rules Calendar for a vote by the Senate for Day 39 or 40 of the legislative session.

SB 37 — Statute of Frauds by Sen. William T. Ligon, Jr. (R), Brunswick, was passed by the House with a vote of 52-1 on Monday.  Since changes were made in the House, the bill now goes back to the Senate for an agree/disagree vote.

SB 110 — Statewide Business Court by Sen. Jesse Stone (R), Waynesboro, was passed by the House with a vote of 155-10 on Monday.  Since changes were made in the House, the bill now goes back to the Senate for an agree/disagree vote.  

By James Bates Brannan Groover LLP

On March 13, 2019, the Georgia Supreme Court issued a new opinion in FDIC v. Loudermilk, et. al.,  the  FDIC’s  case  against  former  directors  and  officers  of  The  Buckhead  Community  Bank  (“BCB”).  The Georgia Supreme Court’s opinion focused on whether directors and officers can be held jointly and severally liable for damages, or whether such damages should be apportioned relative to individual fault.  This opinion is ground-breaking because the court concluded that if directors and officers act “in concert” –where  the  acts  of  one  are  the  acts  of  another  – that  all  directors  and  officers  can  be  held  jointly  and  severally liable, even if one or more was not actually at fault.  However, this opinion left open the door onwhether the FDIC actually proved joint and several liability in this case, an issue that will be determined in the underlying appeal.  This new opinion, and the underlying case history, is important to understand so that bank directors and officers know how to best situate themselves to defend against potential claims.   

On October 25, 2016, the jury in Loudermilk found the former BCB directors and two BCB loan officers liable for $5 million of the $21 million in damages claimed by the FDIC.  These damages were tied to ten loans reviewed and approved by the defendants.  Interestingly, in the jury’s verdict, the jury did not find the two former BCB officers liable on certain loans.  Regardless, the district judge entered a final judgment for  the  full  amount  of  damages and  held  each  former  BCB  director  and  officer  jointly  and separately liable for the acts of all the other former BCB directors or officers, regardless of actual fault.  The district court did so on the basis that all former BCB directors and officers had acted in concert with each other in approving each loan on behalf of BCB.   

On appeal to the United States Court of Appeals for the Eleventh Circuit (“Eleventh Circuit”), the former BCB directors and officers sought a retrial, arguing that the jury should have been instructed that any damages should be apportioned between each of the former directors and officers according to their individual fault.  If the jury had been instructed to do so, any one of the former BCB directors or officers not  at  fault  in  the  making  of  a  loan  would  not  have been  held  liable  for  the  amount  of  the  judgment  entered  for  damages  on  that  loan.    This makes sense, particularly in a loan committee or board meeting context, where a director or officer may vote against a specific action.  However, the district judge deniedtwo requests by the former BCB directors’ and officers’ request for apportionment.

The  Eleventh  Circuit  recognized  that  the  issues  of  apportionment  or  joint  and  several  liability  needed to be answered by the Georgia Supreme Court.  This  led to the Georgia Supreme Court’s review of  the  case  and  its    March  13,  2019  opinion.    In  its  opinion,  the  Georgia  Supreme  Court  held  that  Georgia’s apportionment statute does apply to cases where monetary losses are caused by the negligence of more than one person, such as in the Loudermilk case.  However, the Georgia Supreme Court also held that Georgia’s  apportionment  statute  had  not  eliminated  Georgia  common  law  on  joint  and  several  liability if negligent parties acted in concert with each other.  In other words, the Georgia Supreme Court recognized  that  if  the  FDIC  had  proven  that  all  of  the  former  BCB  directors  and  officers  had  acted  in concert  together, that  all  former  BCB  directors  and  officers  could  be  held  liable  jointly,  as  well  as  individually, for all damages arising from each loan. 

The  Georgia  Supreme  Court’s  opinion did  not  outline  parameters  of  “in concert”  action  in  this  specific  case.    The  lingering  question  then, for  many  banks  now,  is  what  actions  taken  by  directors  or  officers are “in concert”, thus creating joint and several liability.  For example, if a director votes against or abstains from a vote, as in Loudermilk,  but the majority of directors vote to approve the loan, is this an “in  concert”  action  extending  liability?Importantly,  the  Georgia  Supreme  Court  declined  to  answer  whether “in concert” action had taken place in the underlying case, reserving that issue for the Eleventh Circuit. 

The Eleventh Circuit will have to consider whether the FDIC actually proved that all former BCB directors and officers acted in concert when they approved the loans.  This will be interesting to watch, particularly  as  the  jury  did  not  find  two  of  the  former  BCB  officers  at  fault  in  approving  several  of  the  loans.   This  is  a  key  outstanding issue,  one  worth  following.    The  outcome  of  the  Eleventh  Circuit’s  review may heighten risk for director or officer liability if “in concert” action was actually proven.   

It  is  worth  mentioning  that  the  Georgia  Supreme  Court’s  opinion  specifically  discussed  an available remedy for any director or officer not at fault, but who is held jointly and severally liable for in concert action.  This remedy is known as contribution; contribution is the idea that a party who is not at fault,  but  is  held  jointly  and  severally  liable  with  other  at-fault  parties,  may  sue  the  at-fault  parties  for reimbursement  of  any  damages  imposed  on  the  party  not  at  fault.    It  is  worth  noting  that  while  this  remedy is available, the costs of suit and recovery would be expensive.

​Should your bank want to discuss this case or the issues raised in this article, please contact Dan Brannan   at   (404)   997-6023   (dbrannan@jamesbatesllp.com),   Michael   White   at   (478)   749-9921 (mwhite@jamesbatesllp.com), or Corrie Hall at (478) 749-9949 (chall@jamesbatesllp.com).

​This week, the House Banks & Banking Committee held a hearing on our CBA driven legislation— SB 157.  Sen. John Kennedy (R), Macon, did a great job presenting our bill.  While the committee agenda showed that there was a hearing only for our bill, the committee actually decided to take action on the bill.  SB 157 passed unanimously!   Rep. Dale Washburn (R), Macon, will be carrying the bill in the House.   Now, the bill is in the House Rules Committee.  House Rules sets the calendar for House Floor votes.  Members of the House

CBA’s lobbying efforts will shift from a state focus to a federal focus when we visit Washington, D.C. as part of ICBA’s 2019 Capital Summit.  CBA’s John McNair and Lori Godfrey will host the event for several of our bankers and associate members.  We are always looking for any issues that may be impacting your institution directly.  If you have any anecdotal information that you can share with us on any federal issues that you are having, then please email Lori Godfrey at lori@cbaofga.com.  ​

SB 157 is a CBA driven bill that was voted upon by the Senate on Monday with a vote of 55-0!  Senator John Kennedy (R), Macon, did a great job presenting the bill and answering questions from members of the Senate.  The bill crossed over to the House and was assigned to the House Banks & Banking Committee.  Since this week was crossover week, no formal action was taken on the bill by the House as the House was working hard to get all of their bills crossed over to the Senate.  We anticipate that the Committee will be taking up this bill sometime next week.  In the House Banks & Banking Committee, Chairman Greg Morris (R), Vidalia, requires that bills be presented to his Committee for a hearing only the first time.  During the hearing only session, this is when any public testimony can be made on the bill.  CBA is planning to testify during this hearing just as we did during the Senate Banking & Financial Institutions Committee meeting.  Chairman Morris will then put the bill on the agenda for a vote at the following Committee meeting.  Members of the House Banks & Banking Committee that will be hearing/voting upon the bill are as follows: 

• Morris, Greg, Chairman
• Ridley, Jason, Vice Chairman
• Nix, Randy, Secretary
• Alexander, Kimberly, Member
• Allen, Erick E., Member
• Dickey, Robert, Member
• Douglas, Demetrius, Member
• Dunahoo, Emory, Member
• Frazier, Gloria, Member
• Hawkins, Lee, Member
• Houston, Penny, Member
• Knight, David, Member
• Marin, Pedro "Pete", Member
• Mitchell, Billy, Member
• Moore, Beth, Member
• Morris, Marc, Member
• Parrish, Butch, Member
• Pirkle, Clay, Member
• Rhodes, Trey, Member
• Washburn, Dale, Member
• Williamson, Bruce, Member

 
We urge you to contact your Representatives and ask them to support SB 157!  Click here for talking points that you can share with your Representative.  If you need help determining who your legislator is, then please visit  https://openstates.org/ga/legislators/ and input your address.  Contact information for your legislators can be found on this page.  Grass roots advocacy is critical to help us get this bill to the finish line!  As a reminder, by utilizing this service, it will help keep local government deposits in your communities and will increase the opportunity for lending to customers and businesses.  Due to the importance of this legislation, several other industry stakeholders such as NFIB (National Federation of Independent Businesses), GMA (Georgia Municipal Association), ACCG (Association County Commissioners of Georgia), and Georgia Bankers Association have agreed to support CBA’s efforts to codify this legislation.    

ICBA this week unveiled its new legislative and regulatory policy platform: Community Focus 2020. The multifaceted agenda advocates common-sense reforms that promote greater access to financial services and economic opportunity throughout local communities nationwide.
 
Community banks are well-positioned to support greater economic opportunity for all Americans. Serving the nation’s rural, suburban and urban communities with more than 52,000 locations, community banks are critical to ensuring that every local community can join in the nation’s broad economic prosperity. ICBA and community bankers developed Community Focus 2020 to advance a more efficient system of regulation, unbiased laws governing the financial sector, a safer and more secure business environment, and more effective agriculture policies to extend the nation’s economic growth to every corner of the country.

Community Focus 2020 includes policy prescriptions on the following issue areas:

• Regulatory Relief
• More Competitive Landscape
• Bank Secrecy Act/Anti-Money Laundering
• Data Security, Fraud, and Privacy
• Preserving Mortgage Lending
• Tax Relief
• Industry Concentration and Systemic Risk
• Agriculture and Rural America
• Community Bank Innovation
• Payments
• Cybersecurity

​
Click here to download the full plan.