LEGISLATIVE UPDATE

TO: CEOs, Presidents & Legislative Contacts

FROM: Charles M. Miller, SVP / Director of Legislation & Regulation

DATE: March 20, 2009

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Hopefully things will begin to slow down a little at the Capitol for the ABA. Now that the deadline to file bills has come and gone and the few bills we are working to pass are moving along, I hope to have a little more breathing room. However, our extensive review of last minute filings did reveal some disturbing legislation.

House Bill 1935 was introduced by Rep. Jim Nickels, D-Sherwood, to repeal the pay-day lender act. Unfortunately, the exemption for banks is poorly drafted and could call into question interest rate limits on loans made by banks. We think that if the bill is passed in its current form there could be additional litigation regarding interest charged by banks. On Wednesday Rep. Nickels presented his bill to the House Insurance and Commerce Committee where it failed to receive a do pass recommendation.

Another late introduction was HB 2110 by Rep. Dawn Creekmore, D-East End. Her bill is designed to limit the use and disclosure of social security numbers. Although banks aggressively protect their customer’s social security numbers and do not use this information in the manner outlined in her bill, we still have concern. If enacted, the bill would create the most restrictive law in the country dealing with the use of SSNs and make misuse a criminal offence. Furthermore, the bill would create delays in opening new customer accounts because of difficulties in making OFAC checks through a third party. The bill is in the House Insurance & Commerce Committee where we think it will die.

House Bill 2218, which would force a lender to allow a renting tenant to remain in a house up to 90 days after the property was foreclosed, remains in the House Public Health, Welfare and Labor Committee. Thanks to every banker that called his representative on this committee, we believe that this bill will remain in committee.

Rep. Barry Hyde, D-North Little Rock, has agreed to amend his HB 1885 which deals with hold harmless language in contracts. The amendments should give options on the particular kind of conspicuous print that can be used and give more time for these contracts to be changed.

HB 1392, which addresses lien priority for proposed improvement districts, has passed the House and Senate and is on its way to the Governor’s office.

HB 1867 is in response to a lawsuit in which the courts ruled against the lender in a case where a forged document was used to release a legitimate lien and have a clean duplicate title issued. It has passed the House and is in the Senate Transportation Committee.

HB 1984 to require agricultural liens be filed with the Secretary of State rather than the County Clerk has passed the House and is in the Senate Agriculture and Economic Development Committee.

Again, I want to thank every banker that made calls regarding HB 2218 - I am hopeful that we have “killed” this bill. It is this kind of grassroots support that makes our association so effective, and I hope you know that we can’t do it without your help.