General Counsel & Director of Government Relations
The 2020 regular session of the West Virginia Legislature has proven to be an incredibly productive and successful legislative year for the banking industry in West Virginia. During the 2020 session, the WVBankers and Community Bankers of West Virginia (CBWV) sought passage of six pieces of legislation. In addition to the industry-sponsored bills, we were actively involved in two additional pieces of legislation with potential ramifications to the banking industry.
SB 321 clarifying that no lien in favor of the state is enforceable against or takes priority over a prior perfected deed of trust lien creditor was sponsored and introduced very early in the session by Senator Charles Trump IV, and was championed in the House by Delegate Vernon Criss. This same legislation passed both houses of the legislature during the 2019 session but was then vetoed by Governor Justice after the session adjourned. This year we moved quickly to get the bill on the Governor’s desk before the session adjourned so that the legislature would have time to override another veto. The bill was on the Governor’s desk well before the end of the session this year and fortunately, the Governor reconsidered his prior position on this legislation and signed the bill avoiding a potential veto override by the legislature.
Passed Senate 1/24/20 34-0
Passed House 2/12/20 91-2
Signed by Governor 3/2/20
HB 4410 creating parity between state and federal law restricting loans to officers and directors of a bank and requiring prior approval by the board of directors only for loans above $25,000 or more than 5% of the banks unimpaired capital and surplus up to an aggregate of $500,000. This legislation has long been a goal of the banking industry in West Virginia. Four of the five surrounding states already have parity with federal Reg O. HB 4410 was sponsored and introduced in the House of Delegates this year by Delegate Eric Nelson and co-sponsored by Delegates Vernon Criss, Steve Westfall, Tom Azinger, Amanda Estep-Burton, Chad Lovejoy, Paul Espinosa, Jason Barrett, Mick Bates, Dean Jeffries, and Moore Capito. In the House, the bill was considered by both the Committee on Banking and Insurance and the Committee on the Judiciary. In the Senate, the bill was given a single reference to the Committee on Banking and Insurance where it was initially rejected by a tie vote of 5-5 on February 25th after facing intense scrutiny from Senators Mike Romano and Doug Facemire. Several members of the Republican majority on the committee were absent at the time of the vote and Senator Bill Hamilton voted with the Democrats on the committee, creating a tie vote and effectively rejecting the bill. Opponents of the legislation argued the bill would open the door to malfeasance on the part of executive officers and directors who would seek these loans for risky or illegitimate purposes. Then, during the final week of the session, we were successful in encouraging Senator Eric Tarr to move the committee to reconsider the bill in accordance with Senate rules. As the bill was under consideration, all the members of the committee were called into the room to vote on the bill. The Republican majority on the committee were ultimately successful in passing the bill out of committee to the floor. During the second reading of the bill on the floor of the Senate, Democrats advanced their opposition to this legislation again suggesting that officers and directors of a bank would take advantage of this legislation to fund a host of nefarious activities including financing gambling addictions.
Passed House 2/5/20 97-1
Passed Senate 3/5/20 18-15
Signed by Governor 3/25/20
HB 4433 codifying standard terms of a deed of trust including covenants to pay and covenants to protect and preserve the value of the collateral. This legislation came originally at the request of a member bank who had been involved in a dispute with a borrower in the State of Virginia over unauthorized timbering activities which diminished the value of the property securing a loan. The Code of Virginia sets forth the standard rights and duties of parties to a deed of trust while also preserving the right of parties to negotiate and contract their own terms, even if different from the terms contained in the Code, at arm's length. This bill was modeled after the Virginia law. The bill was sponsored and introduced in the House by Delegate Eric Nelson and was co-sponsored by Delegate Vernon Criss. The consumer advocacy lobby took some exception to parts of the bill in its original form and after extensive negotiations, a better more succinct, agreed version of the bill was adopted as an amendment in the House Judiciary Committee. In the Senate, the bill was single referenced to the Judiciary Committee and taken up on the second to last day of the session. Senator Charles Trump IV directed staff counsel to prepare a committee amendment to the bill which generally re-organized several provision within the bill, removed a provision relating to the maintenance of improvements in “tenantable condition” and added a provision placing the effect of the bill only on deeds of trust signed after the date the bill becomes law. Then Senator Mike Romano moved to amend the bill to strike out the anti-waste provision, arguably the most important part of this legislation to our member banks. The Committee adopted both amendments and the bill was voted out to the Floor of the Senate. After speaking with the bill sponsors regarding the Senate amendments, the House concurred in the Senate amendments and then amended the bill to reinsert the anti-waste provision. The Senate then refused to concur on the House bill with the anti-waste provision re-instated and the bill failed. We will re-evaluate the importance of this legislation and consider further efforts toward passage of this legislation for the 2021 session.
Passed House 2/25/20 80-19
Passed Senate 2/12/20 34-0
HB 4406 provides repose from costly, stale, and frivolous claims against banks relating to long-dormant time, savings and demand deposit accounts after the bank lawfully destroys all records relating to such accounts in accordance with existing state record retention laws. This legislation was originally proposed by a member bank and was based upon a similar law in the state of Ohio. The bill was sponsored and introduced in the House of Delegates by Chairman Eric Nelson with Delegates Criss, Porterfield, and Espinosa as co-sponsors. We worked diligently with members of the consumer advocacy bar to finalize a draft of this legislation that achieved the goals of the industry while also eliminating the concerns of other stakeholders. Once the language of the bill was agreed upon by all interested stakeholders the bill faced no further opposition. The bill was considered by both the respective committees on banking and insurance before receiving a vote by the full House and Senate.
Passed House 2/14/20 91-0
Passed Senate 3/5/20 33-0
Signed by Governor 3/25/20
HB 4529 clarifying that no lien in favor of a resort area district as designated by the State of West Virginia, resulting from an unpaid bond assessment is enforceable against or takes priority over a prior perfected deed of trust lien creditor. This bill was born of concern by member banks active in lending in and around Snowshoe, currently, the only officially designated “Resort Area District” in West Virginia. The bill was sponsored and introduced in the House of Delegates by Vernon Criss with Eric Nelson as a co-sponsor. The bill faced no opposition and was considered by both the respective committees on the judiciary before receiving a vote by the full House and Senate.
Passed House 2/20/20 96-0
Passed Senate 3/3/20 34-0
Signed by Governor 3/24/20
HB 2086, a uniform act permitting that any state law requiring a land record document be an original, on paper, or in writing would be satisfied by a document in electronic form and any requirement that a document contains a signature or acknowledgment would likewise be satisfied by an electronic signature or acknowledgment. The bill authorizes county clerks to accept, index and store electronic documents for recording. This legislation has been introduced in some form for several years. The bill creates an advisory committee which would include representatives of the West Virginia Bankers Association and the Community Bankers of West Virginia and the Community Bankers of West Virginia for the purposes of establishing rules and procedures and identifying and selecting software compatible with that used in other jurisdictions that have adopted this uniform act. This legislation was sponsored and introduced by Delegate Erika Storch and was considered by the Committee on the Judiciary in both the House and the Senate before final vote on the floor.
Passed House 1/22/20 95-0
Passed Senate 2/10/20 32-0
Signed by Governor 3/25/20
HB 4621 / SB 514 – Fintech Sandbox – WVBankers Association was contacted by Delegate Moore Capito well prior to the start of the 2020 session regarding his intent to sponsor fintech sandbox legislation with a goal of encouraging innovation, entrepreneurship and spur economic growth and development and create jobs in West Virginia. Delegate Capito organized a conference call with representatives of Vantage Ventures, a program within the John Chambers College of Business and Economics at West Virginia University to discuss an early draft of a bill. The early draft of the bill was extremely problematic from the standpoint of the banking industry. We provided Delegate Capito and the representatives from WVU with an informal list of our concerns and Delegate Capito requested that we revise the early draft of the bill to try and address the concerns of the banking industry while also preserving the spirit and intent of the legislation. We provided a revised version of the bill on January 20, 2020 which made the following critical changes to the earliest version of the bill:
Administration of the sandbox was assigned to the Division of Financial Institutions as opposed to the Department of Commerce avoiding the creation of an incredibly unwieldy bureaucracy, causing significant waste and delay, and impeding the original intent of the sandbox. The discretionary authority of WVDFI to administer the program and regulate participants within the program was also expanded.
Applicants seeking to test products within the sandbox were required to maintain a physical location within the state wherein all records would be stored for examination and review by the WVDFI increasing the investment within the state and further leveling the field with existing financial institutions by giving WVDFI examination authority over sandbox participants.
Applicants seeking to test products within the sandbox were required to demonstrate a good faith effort to establish a partnership with a bank or other licensed financial institution operating within the state, reducing the disruptive effects of the sandbox and encouraging innovation within the existing financial services industry.
State consumer protection rules and regulations were imposed upon participants within the sandbox to reduce risks to consumers who are using these products and services and to further level the field with existing financial institutions that are required to comply with these laws.
The revised bill was introduced in the House on January 31st with Delegate Moore Capito as the lead sponsor and Delegates Shott, Queen, Espinosa and Cowles as co-sponsors. Meanwhile, without any prior consultation with the industry, Senator Eric Tarr introduced a fintech sandbox bill in the Senate, SB 514, that mirrored the highly problematic original draft as proposed by the representatives of the Vantage Ventures program at WVU. Senator Tarr was the lead sponsor and Senator Plymale co-sponsored the bill. The House bill was single referenced to the Committee on the Judiciary and the Senate bill was single referenced to the Committee on Economic Development. Various stakeholders participated in negotiations around this initiative including the state Division of Financial Institutions and the consumer advocacy bar. Throughout the pendency of this legislation in committees, the stakeholders insisted on additional changes, including the application of additional consumer protection statutes, the imposition of a consumer protection bond requirement, and enhanced administrative and regulatory authority for WVDFI. Ultimately, the House version of the bill emerged as the better of the two versions and the bill got final approval of both houses of the legislature on the final day of the session.
Passed House 2/5/20 97-1
Passed Senate 3/5/20 18-15
Signed by Governor 3/24/20
Effective Date 6/5/2020
HB 4377 seeks to limit the financial exploitation of seniors by empowering financial advisors and investment brokers to delay disbursements and other transactions for a brief period and report suspected exploitation or fraud to the appropriate agencies to conduct an investigation into the allegations. This bill is the result of an effort by the national trade association of investment brokers and financial advisers, the AARP and the WV Auditor’s Office to create additional protections against financial exploitation and abuse of seniors and is supported by member banks that offer brokerage and advisement services to their customers. The bill was sponsored and introduced in the House of Delegates by Delegate Westfall with Delegates Nelson, Queen, Criss, Storch, Rohrbach, Hott, Jeffries D., Atkinson, and Toney, as co-sponsors. The bill was considered by the House’s Committee on Senior, Children and Family Issues and the Committee on the Judiciary. The House Judiciary Committee adopted an amendment stripping protections against exploitation in all non-disbursement transactions. The member banks that support this legislation and the other stakeholders requested our added support and assistance in getting the bill amended in the Senate and restoring the protections that were stripped from the bill by the House. The bill was single reference in the Senate to the Judiciary Committee and the bill was amended to re-insert protections for non-disbursement transactions. The House concurred in the Senate’s amendment on the final day of the session.
Passed House 2/25/20 95-2
Passed Senate 3/6/20 34-0
Signed by Governor 3/19/20