Pub. 14 2019-2020 Issue 5

NEBRASKA BANKERS ASSOCIATION 7 PRESIDENT’S MESSAGE NBA Government Relations and LB 622 Richard J. Baier, President & CEO, Nebraska Bankers Association President'sMessage — continued on page 8 Y OUR NBA WAS FOUNDED MORE THAN 130 years ago with the primary purpose of collectively organizing Nebraska banks to focus on the issues of public policy and government relations (GR); speaking with one unified industry voice was the early NBA rallying cry. This important GR function remains a key component of theNBA’smissionand fo- custoday.Eachyear,ourNBAteamrelieson member institution input, participationand ideas incraftingpublicpolicies that support member institutions. For thosewho do not followtheNBAGRprocess closely, Iwanted to review how this concept played out in 2019, specifically as it relates to LB 622, single bank pooled collateral legislation. Historically, member institutions have raised the issue of how Nebraska banks pledge collateral for public deposits in excess of Federal Deposit Insurance Corp. (FDIC) limits. Several years ago, the NBA advocated for and achieved a change to Nebraska law to provide a mechanism for the Nebraska Department of Banking and Finance (NDBF) to create and oversee a pooled collateral program. Even though the law was changed, the concept never took off. LB 622, as conceptualized by the NBA and introduced by former NBA Chairman andSenatorMattWilliams, provides for the creation of a single bank pooled collateral program (Program) to satisfy the pledging requirements for public deposits in excess of FDIC insured levels. This legislation, as adopted last year, allows the NDBF to designateanadministratorfortheProgram. The proposal received unanimous sup- port from the legislature’s Banking, Com- merce and Insurance Committee and was overwhelmingly approved by the legislature andsigned into lawbyGovernorRicketts. The Nebraska legislationcalls for implementation of the Program by the NDBF no later than July 1, 2020. Special thanks to the Georgia Bankers Association (GBA), who offered ex- perience and insight regarding the Georgia pooled collateral program, which the GBA has administered since the late 1990s. Current practice requiresNebraskabanks topledge collateral designated in lawfor every deposit made by political subdivisions and state agencies in excess of the FDIC insured limits. Many of our member banks have shared that this process is administratively time-consuming and the banks often find themselves significantly over-pledged. The new Programwill allow individual banks to aggregate all of their public deposits into a single pool, which the bank will then pledge collateral against. Participating banks should experience significant time and cost savings and establish their pledging levels more efficiently. To implement the Program, the NDBF issued a Request for Information in October 2019 seeking information fromentities inter- ested in serving as the Program administra- tor on behalf of the NDBF. In order to assist ourmembers, theNBISCOBoardofDirectors directed staff to submit a proposal to serve as the Program administrator. NDBF has recently issued a Request for Proposal with plans to select an administrator by May 1, 2020. The Program administrator will be allowed to charge fees to participating banks to offset costs.