Celeste Embrey

Celeste Embrey
SVP of Government Relations and Deputy General Counsel

State legislative and regulatory update

In a state with an estimated population of more than 28 million, it’s amazing what the Texas Legislature accomplishes in 140 days every other year. The state’s economy is the 10th largest in the world, and the fact that our legislature can take care of all of its business for two years in 140 legislative days is sometimes hard to fathom.

The reality of the situation, of course, is that because of the way the system is set up, a great deal of work must be done between legislative sessions, both on the legislative and the regulatory front. That work is the subject of today’s update.

On the regulatory front, the Finance Commission meets every two months to ensure the banks, savings institutions, nondepository financial service providers and other regulated entities chartered or licensed under Texas law operate as safe and sound institutions and increase the economic prosperity of the state.

In addition to reviewing the three agencies under its regulatory umbrella, at each of its meetings the Finance Commission also considers agency-proposed rules. At the December meeting, these rules ranged from the rules of procedure for contested case hearings, to a review and re-adoption of existing statutorily required payoff statements, to the adoption of a rule requiring state banks, trust companies and money services businesses to notify the Department of Banking in the event of a cybersecurity incident.

Because the cybersecurity notice is required of TBA’s state-chartered commercial banks and trust members, it’s important to be aware of its requirements. The rule is designed to ensure the Department of Banking is aware of substantial cybersecurity events experienced by banks and trust companies and requires banks to notify the banking commissioner within 15 days following a bank or trust company’s determination that a cybersecurity incident has occurred.

“Cybersecurity incident” is defined as any observed occurrence in an information system, whether maintained by the bank or by an affiliate or third-party service provider at the direction of the bank, that jeopardizes the cybersecurity of the information system or the information the system processes, stores or transmits; or violates the security policies, security procedures or acceptable use policies of the information system owner to the extent such occurrence results from unauthorized or malicious activity.

The new rule will be published in the Texas Register, so make sure to watch for an update in an upcoming edition of Texas Banking Weekly.

On the legislative front, both the speaker of the house and the lieutenant governor have issued their interim charges for House and Senate committees to study and make recommendations to the 87th Legislature, which will convene Jan. 12, 2021.

The recommendations that result from interim committees often form the basis for legislation that will be introduced in the next legislative session, so it’s critically important for TBA, as your advocates at the Texas Capitol, to be engaged in this process. As of now, the following interim charges are the ones we’re paying particular attention to:

• House Pensions, Investments & Financial Services’ charge to oversee the implementation of HB 2945, last session’s legislation designed to protect Texas consumers against credit card skimmers;
• House Business & Industry’s study of HB 4390, legislation that expanded Texas’ data breach notification law and created the Texas Privacy Protection Advisory Council; and
• The Senate Intergovernmental Relations Committee’s charge to review existing regulations governing the low-income housing tax credit program and make recommendations to provide regulatory relief and provide greater development of affordable housing in Texas.

We anticipate committees will begin their work in earnest in the coming weeks; we’ll continue to update you as information becomes available.

As always, if you have any questions, please do not hesitate to let me know. Each of us on the TBA Advocacy Team, which I’m happy to report now includes Wynn Baker, who recently joined the team as TBA’s BankPac and grassroots coordinator, looks forward to advocating on the banking industry’s behalf this year.