MIBA LOBBYING Report Andy Arnold Arnold & Associates The Missouri General Assembly gaveled in for the 2024 legislative session on Jan. 3. House and Senate leaders made the usual first-day speeches outlining their vision for the 2024 session. With nine open Senate seats, over 30 open House seats and, at present, 10 House and Senate members running for statewide office, this year will see members jockeying for press attention and position on the major issues before the August 2024 primary. Legislation to raise the cap on the “MO Bucks” linked deposit program was prefiled and introduced in both the House and Senate. Rep. Terry Thompson’s version, HB 1803, is on the move, having already been heard and voted DO PASS by the House Financial Institutions committee. The next step is a referral to House Rules, with House floor debate following shortly thereafter. Once the bill clears the House, we start the process over in the Senate. MIBA Executive Director Matt Ruge, Andrew Arnold and I are working with others to push the linked deposit bill across the finish line this year. We are also monitoring other legislation and will continue identifying legislation that could impact MIBA for you moving forward. As before, we thank you for your continued confidence and for the opportunity to serve your interest with the Missouri state government and the Missouri General Assembly. ■ interest rates rise, assets whose value is tied to cash flow (i.e., CRE assets) will decrease in value due to higher discount rates applied as a result of higher working average cost of capital calculations. Lower asset values, in turn, could likely trigger issues with LTV covenants. Similarly, lower valuations of assets will likely cause issues with D/E ratio covenants. Plan of (or Plan for) Attack As suggested, lenders should first review their loan and collateral documents to ensure that their documents are consistent with their understanding of the collateral package. Likewise, care should be taken to check that the liens granted in the collateral documents have been properly perfected, that the lenders have proof of the proper filings and that there have been no lapses in the UCC filings. Finally, lenders should check and test the financial covenants in the loan documents to understand the effects of the present economic environment on their borrower and their collateral. In the event a lender discovers an issue, the loan covenants may present an opportunity for the lender to engage with its borrowers to discuss the issue and provide an avenue for resolving the identified concerns and issues. ■ Jason Kathman and Zachary Fairlie are partners on the Spencer Fane Bankruptcy, Restructuring, and Creditors’ Rights team. They can be reached at jkathman@spencerfane.com and zfairlie@spencerfane.com, respectively. 1 Default Rates to Rise in U.S. and Europe as Weaker Growth Offsets Rate Cuts; Default, Transition, and Recovery: Higher Rates For Even Longer Could Push The U.S. SpeculativeGrade Corporate Default Rate To 5% By September 2024. 14 | The Show-Me Banker Magazine
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