LC 2.11 Transactions Fairness Act (Tabled)

[Former President tack50]

Transactions Fairness Act

to protect consumers from common banking and credit abuse

Section I

1. A financial institution, also known as a banking institution, is defined as a corporation, company or other business entity that provides services as an intermediary of financial markets.

2. A consumer is defined as a person or organization that uses an economic service.

Section II

1. No financial institution shall charge a fee for the following services.

   a. Usage of an Automated Teller Machine, or ATM.

   b. Opening an account.

   c. Closing an account.

   d. Not interacting with the account.

   e. Replacing a lost or stolen credit or debit card.

   f. Stop payment on a check.

   g. Issuing paper statements.

   h. Paying an amount owed through cash, credit or debit.

2. No financial institution shall conduct the following practices.

     a. "Reordering Transactions." This is defined as processing of transactions from a consumer's account in an order that may be different from the order in which the transactions were made.

     b. "Dual Tracking." This is defined as the process in which a mortgage lender may request documents and begin processing a loan modification while simultaneously engaging in the foreclosure process.

3. All financial institutions engaging in credit card services must allocate a minimum five day grace period prior to issuing a late fee for balance payments.

4. In the case of an overdraft or overdrawn account, no fee shall be charged to the consumer until the amount exceeds $50 US. Once the $50 US cap is breached, a fee may be charged to the consumer ten business days following a mailed or electronic notice.

5. Owed funds to a financial institution cannot be collected through the garnishing of Social Security payments.

6. Financial institutions cannot sell or foreclose on real estate without signed authorization from the homeowner.

7. All financial institutions must have a customer service phone line printed clearly on its website home page.

8. Utilities may not charge a fee for the processing of credit or debit cards.

Section III

1. The penalty for failure to abide by the any of the above guidelines shall be no less than:

  a. If a Corporation, Limited Liability Company or Partnership with Gross Income under $10 Billion: 20% of the Business Gross Income and Seizure of Assets.

  b. If a Corporation, Limited Liability Company or Partnership with Gross Income over $10 Billion: 40% of the Business Gross Income and Seizure of Assets.

Section IV

1. This act takes effect on October 1st, 2019 contingent upon signing by the governor.

Sponsor: PyroTheFox

Debate time for this bill has started and shall last for no less than 72 hours

[Mr. Reactionary]

As someone who deals with issues of federal preemption in real life, I'm afraid I have to point out that a lot of these proposals are federally preempted. Its not a satisfying answer, but as written this is cockblocked by federal law.

The below link is a very dense read, but I'm parsing through it to try and confirm. Most banking regulations are set federally (because of the FDIC) and regulations imposed on interstate commerce by subordinate governments are null and void.

https://www.americanbar.org/groups/business_law/publications/committee_newsletters/banking/2019/201904/fa_1/

It usually fuqs me over at my job because my City practically cant regulate anything about the railroads running through our town because of federal preemption. The above article does suggest there are allowable alternatives. Instead of regulating banks for example you are allowed to regulate "non-bank subsidiaries, affiliates and agents of national banks and FSA". Dodd-Frank specifically exempted subsidiaries and affiliates from federal banking preemption. Ultimately you either need to amend federal law to adopt these changes nationally, or change federal law to allow regions to regulate.


Edit: Coincidentally, I know there were a few provisions in a soon to be introduced federal bill that would let Regions regulate certain Credit Union practices in lieu of federal regulations. Perhaps you could propose something similar for these bank proposals when that comes up.

[S019]

I think that this will make banks go bankrupt and lead to another Great Depression

May the sponsor please say, how banks shall remain economically sufficient

[lfromnj]

Why can't a financial institution charge a fee for opening an account?

[Mr. Reactionary]

Actually looking more at some of these provisions... what is intended by II-6? Foreclosures are a court monitored process, prompted largely by the owner signing a mortgage agreeing to be foreclosed on if they default. The mortgage is already signed by the owner... are you actually proposing that deadbeats can never make a single payment towards a mortgage and creditors cant even take the secured property unless the deadbeat agrees to voluntarily sign another paper? I foreclose on a bunch of properties as part of my job, always for chronically delinquent taxes or demolition fees. In pretty much every case we are never offered any money from the debtor and are not contacted. Often they are dead or dont live in state. How in the hell am I supposed to foreclose on vacant blighted tax delinquent houses where the "owner" is 26 heirs spread across 8 states and the amount owed is 10 times the value of the whole property? Usually we do this in conjunction with banks as we need a buyer and there are often additional liens. The proposal in II-6 does not reflect reality and would likely result in no more home loans for anyone.

[Pyro]

Thank you, Mr. Speaker.

This legislation, in essence, is a collection of fair-minded regulations intended to neuter the ability of unaccountable corporate financial entities to rip-off consumers and defraud their customers. These are companies that unjustly collect funds from everyday, working Atlasians through underhanded and sinister practices, as highlighted most clearly through "Dual Tracking", when a bank pretends to follow through with a loan while, at the same time, pushing foreclosure.

It is past time we take the reigns away from these fraudsters and give Lincolnites a small sense of peace of mind. Accessing your own funds should never result in a fee. Closing an account or wishing to receive paper statement should never result in a fee. Our people deserve these common sense liberties when it comes to how they are treated by the banking industry.

Mind you, this is the first stepping stone on the road to a just society, and although the measures taken in this bill shall relieve only a minor burden from the backs of working people, they are absolutely essential. For those present in this Council whom are not beholden to the pleas of billion dollar financial institutions and instead wish to return power to the hands of consumers, I urge your support.

[Pyro]

I think that this will make banks go bankrupt and lead to another Great Depression

May the sponsor please say, how banks shall remain economically sufficient

The financial industry does not depend on these practices for survival.
They are simply in place to squeeze the working classes of their funds for further profit.

[Mr. Reactionary]

Just remember, as written II-1 - II-7 is federally preempted and would accordingly be legally null, void, and unenforceable. I am not willing to say yet if II-8 is as no definition of utility is offered but a utility is definitely not a bank. FERC may have preempted but I have not yet researched. I will say the public utility I am in-house counsel for charges a convenience fee for credit card transactions as that costs money. If you consume $95 worth of services but we can only collect $89 each month because of the payment method, we WILL raise rates for everyone.

[Pyro]

Why can't a financial institution charge a fee for opening an account?

We need to place limits on the ability of these institutions to exploit low-income consumers.

[Pyro]

Just remember, as written II-1 - II-7 is federally preempted and would accordingly be legally null, void, and unenforceable. I am not willing to say yet if II-8 is as no definition of utility is offered but a utility is definitely not a bank. FERC may have preempted but I have not yet researched. I will say the public utility I am in-house counsel for charges a convenience fee for credit card transactions as that costs money. If you consume $95 worth of services but we can only collect $89 each month because of the payment method, we WILL raise rates for everyone.

Please enlighten us when the Atlasia federal government passed a banking regulation bill to either forbid or allow any of the practices I've outlined. I understand you're in favor of allowing these corporations to ransack the pockets of the working class and foreclose on their homes without any regulation whatsoever, but spare me the crocodile tears.

Shall a financial institution seek to defraud consumers whilst operating in Lincoln, they will be reprimanded to the fullest extend of the law. It is our right as a region to implement these restrictions.

[lfromnj]

Why can't a financial institution charge a fee for opening an account?

We need to place limits on the ability of these institutions to exploit low-income consumers.

How is a low income consumer being exploited when they aren't forced to open a bank account with that agency?

[Pyro]

Why can't a financial institution charge a fee for opening an account?

We need to place limits on the ability of these institutions to exploit low-income consumers.

How is a low income consumer being exploited when they aren't forced to open a bank account with that agency?

These fees were not brought about all at once at a random point in time. They were instituted in a drip-like fashion, with no action whatsoever taking place from the governmental side of things to blockade it. This is what needs addressing, because these micro costs add up and I've seen no sign of slowing. It seems as though you're opposed to the general idea of placing these restrictions on the multi-trillion dollar banking industry, and I'm sorry to see that, but these practices are unnecessary, unethical, and spit in the face of workers trying to make ends meet.

[Former President tack50]

Just remember, as written II-1 - II-7 is federally preempted and would accordingly be legally null, void, and unenforceable. I am not willing to say yet if II-8 is as no definition of utility is offered but a utility is definitely not a bank. FERC may have preempted but I have not yet researched. I will say the public utility I am in-house counsel for charges a convenience fee for credit card transactions as that costs money. If you consume $95 worth of services but we can only collect $89 each month because of the payment method, we WILL raise rates for everyone.

Could you specify how II-1 to II-7 is federally preempted and legally null?

I'll say that this is an excellent bill that will help the citizens of our region not to be abused by banks and financial institutions with extra pointless charges.

[Mr. Reactionary]

Just remember, as written II-1 - II-7 is federally preempted and would accordingly be legally null, void, and unenforceable. I am not willing to say yet if II-8 is as no definition of utility is offered but a utility is definitely not a bank. FERC may have preempted but I have not yet researched. I will say the public utility I am in-house counsel for charges a convenience fee for credit card transactions as that costs money. If you consume $95 worth of services but we can only collect $89 each month because of the payment method, we WILL raise rates for everyone.

Please enlighten us when the Atlasia federal government passed a banking regulation bill to either forbid or allow any of the practices I've outlined. I understand you're in favor of allowing these corporations to ransack the pockets of the working class and foreclose on their homes without any regulation whatsoever, but spare me the crocodile tears.

Shall a financial institution seek to defraud consumers whilst operating in Lincoln, they will be reprimanded to the fullest extend of the law. It is our right as a region to implement these restrictions.

https://fas.org/sgp/crs/misc/R45081.pdf

This is a pretty good introduction to the subject specific to banking (general info on the broad subject of preemption will be included at the bottom). It was drafted by the Congressional Research Service irl last year, but the bank preemption laws are usually many, many decades old. (Exceptions for the Credit CARD Act which IIRC applies to a few of the proposals in your bill and Dodd-Frank which explicitly clarified that subsidiaries are NOT preempted in the same way as their bank parent.

Just a few quick quotes from the above report on point:

"In Barnett Bank of Marion County, N.A. v. Nelson, the Supreme Court held that the National Bank
Act of 1864 (NBA) preempts state laws that “significantly interfere” with a “national bank’s exercise of its powers”"

"The Supreme Court has also issued two decisions on the preemptive scope of a provision
of the NBA limiting “visitorial powers” over national banks to the Office of Comptroller of Currency, holding that the provision extends to the operating subsidiaries of national banks, but does not bar state judicial law enforcement actions against national banks."

"... some federal banking laws expressly preempt state laws, while others do so impliedly. The OCC, an independent bureau within the Department of the Treasury that serves as the primary regulator for federally chartered banks, has promulgated broad rules that expressly preempt certain categories of state laws concerning federally chartered banks. And the Supreme Court has held that the NBA impliedly preempts state laws that “significantly interfere with” a national bank’s exercise of the powers conferred by that Act."

" In Wells Fargo Bank of Texas N.A. v. James, for example, the Fifth Circuit held that an OCC regulation granting national banks the power to “charge [their] customers non-interest charges and fees”preempted a state statute prohibiting banks from charging a fee for cashing checks in certain circumstances, reasoning that the state statute “prohibit[ed] the exercise of a power which federal law expressly grants the national banks.”"

"The Ninth Circuit employed similar reasoning in Rose v. Chase Bank USA, N.A., which held that an NBA provision granting national banks the power to “loan money on personal security”preempted a state statute imposing various disclosure requirements on credit card issuers under the Barnett Bank test."

And theres a lot more with hundreds of citations within the CRS Doc linked above. It is dense, but its less jargony than the ABA report on this subject in my reply last night.

Don't get me wrong, I do think a lot (but not all) of the proposals in this bill are bad policy, but as someone who does get cockblocked by federal preemption with some regularity, it is a real, frustrating thing and for better or worse you are trying to regulate entities you dont have jurisdiction over. Banks, trains, cell towers, bankruptcy, airspace, radio frequencies ... there are a lot of federal laws that flat out say contrary laws by States or localities (and in this case regions) are null, void, and unenforceable. It's not a very satisfying answer. It basically means start federally. Im not a bank lawyer but it reads like there are federal banks and state banks. Perhaps some state banks can be regulated on those subjects as can the Dodd-Frank carveout for subsidiaries. But JP Morgan, Bank of America, they can't be subject to these regulations despite what the definition in the proposed bill says.

See also.
https://www.occ.treas.gov/news-issuances/news-releases/2010/nr-occ-2010-39c.pdf
So this is from 1992 but the appendix has a great inventory of federal preemption in banking
https://en.wikipedia.org/wiki/Federal_preemption

[Former President tack50]

Is there a way to achieve the objectives of the bill while still being constitutional and enforceable? Or is this something that only the federal government can regulate?

I imagine we could always just make banks pay penalties whenever they impose those fees? (and make them proportonal to the fee imposed, so they can't get away by simply raising said fees)

[Former President tack50]

Ok, so where are we at with this?

There's a part of me that's tempted to try and pass this and get someone to sue to the Supreme Court if it's unconstitutional; but I'd rather pass a constitutional law in the first place.

Another alternative would be to try and send this to the federal Congress as civilian sponsored legislation signed by all members of the Council.

[S019]

I am not supporting a law that causes ruin to banks

[Former President tack50]

To try and get around Mr R's concerns of federal preemption, I have decided to introduce this bill in the federal Senate as civilian sponsored legislation.

I hereby encourage all supporters of this bill in the Council and outside it to sign the petition.

https://uselectionatlas.org/FORUM/index.php?topic=239009.msg6807633#msg6807633

I also encourage the current Senators, especially those representing Lincoln, Comrade Funk and Louisville Thunder to sponsor this if they are in support.

[S019]

To try and get around Mr R's concerns of federal preemption, I have decided to introduce this bill in the federal Senate as civilian sponsored legislation.

I hereby encourage all supporters of this bill in the Council and outside it to sign the petition.

https://uselectionatlas.org/FORUM/index.php?topic=239009.msg6807633#msg6807633

I also encourage the current Senators, especially those representing Lincoln, Comrade Funk and Louisville Thunder to sponsor this if they are in support.

No, this bill is unconstitutional, I urge Lincoln to reject it

[Former President tack50]

To try and get around Mr R's concerns of federal preemption, I have decided to introduce this bill in the federal Senate as civilian sponsored legislation.

I hereby encourage all supporters of this bill in the Council and outside it to sign the petition.

https://uselectionatlas.org/FORUM/index.php?topic=239009.msg6807633#msg6807633

I also encourage the current Senators, especially those representing Lincoln, Comrade Funk and Louisville Thunder, to sponsor this if they are in support.

No, this bill is unconstitutional, I urge Lincoln to reject it

Uh, the only reason this bill is unconstitutional is because it's something that has to be handled by the federal government, not the regions. If the federal government passes it, then no problems there.

[Pyro]

As this bill is being taken up at the federal level, I put forward a motion to table.

[Former President tack50]

Councillors, a vote on the motion to TABLE is now open

Please vote AYE, NAY or Abstain
This vote shall last for 48 hours or until all Councillors have voted

A successful Aye vote will remove the bill from the floor.

[S019]

Aye

[Sirius_]

Aye

[Pyro]

Aye.