It was no coincidence that this year's lobbying day for the Louisiana Bankers Association, which drew the largest number of participants in memory, featured a keynote speech from Insurance Commissioner Jim Donelon.
"It's not sexy or all over the news, but this is a very huge issue for us," says David Boneno, general counsel to the Louisiana Bankers Association (LBA). "You can't write loans without insurance, and some companies have already stopped writing policies altogether. This could drive up the cost of transactions for everyone."
The LBA is usually a quiet force in the Legislature, but its fundraising and lobbying tactics have grown more sophisticated. LBA has become the unofficial backbone of the Coalition to Insure Louisiana, a broad group of professional associations and white-collar businesses -- banking, real estate, insurance, accounting, contracting, auto dealerships and more -- whose main mission is to keep insurance available and affordable. LBA's state PAC has almost $53,000 in its coffers, and its PAC for federal lobbying contains almost $37,000.
The insurance bill that LBA opposed most was Senate Bill 693 by Benton Sen. Robert Adley, a Democrat. It would have repealed the "flex band" law that allows insurance companies to increase or decrease rates up to 10 percent a year without the approval of the Insurance Rating Commission -- the only state entity in the nation that still regulates rates the way it does.
The flex band repeal also would force insurance companies to justify rate changes with the state Department of Insurance. The LBA and its coalition were successful in killing the measure, but they are standing guard in the session's final weeks.
Repealing the flex band law would have sent a terrible signal to any company doing or considering doing business in Louisiana, says Guy Williams, president of Gulf Coast Bank and Trust, which has ATM and branch locations stretching from Acadiana to New Orleans. Williams, who has spent considerable time at the Capitol this session, opposes any move to strengthen the rating commission or give insurance companies another excuse to leave the state.
"Louisiana has a backwards way of approaching these things," he says. "It's all anti-competitive. We're letting a group of people who have no interest in the industry make these decisions. I fear the Legislature is moving in the wrong direction."
During the same committee meeting in which the LBA killed the flex band bill, the group gutted legislation that would have offered consumers several options when suing insurance companies.
In addition, the association fought hard to water down House Bill 448 by New Orleans Rep. Charmaine Marchand. That bill requires the Office of Financial Institutions to educate borrowers about loan payment options if regulators again encourage forbearance, or deferred payments, after another natural disaster. New additions to the bill provide that lenders obtain borrowers' written approval if the entire principle and interest is due after the forbearance period, which in most cases was 90 days after the fall hurricane season.
Loan defaults were a major concern last year, but fears subsided a bit in January when payments came due and deposits into banks started increasing again. "We learned just how resilient the banking industry was and how willing consumers can be," Williams says.
As the current legislative session hits its final stride this month, the LBA is also opposing bills that attempt to keep insurance proceeds for damaged homes from being seized for other debts -- i.e., out of the hands of lenders. On the other end of the spectrum, the group has thrown its support behind legislation that requires insurance agents and brokers to have three hours of continuing education about flood insurance.
One of the most significant remaining issues is the state's housing plan, which recently received approval from the federal Department of Housing and Urban Development. The nod comes with $4.6 billion from HUD's Community Development Block Grant program, but another $4.2 billion is needed from Congress to fully finance the plan. In theory, homeowners would use the money to make repairs, rebuild or participate in buyouts.
Previous versions of other housing plans promised bankers and lenders 60 percent of what they were owed, or completely left them out of the process. Of course, the devil is in the proverbial details, and many bankers still don't know what the details are.
"The banks aren't crying and telling us they are having problems," says Boneno, "but many are waiting to find out about the fine print on many issues, like the recovery plan. These things will need to be clarified before any major decisions about the future can be made."
Jeremy Alford can be reached at email@example.com.
In last week's story regarding eBay's lobbying efforts in the state Legislature ("Doing Their Bidding," May 31), we incorrectly reported that eBay opposes proposed legislation that would require certain eBay sellers to be licensed by the Louisiana Auctioneers Licensing Board. The LALB has that authority under current law, and eBay supports newly proposed Senate Bill 642, which would exclude eBay sellers from state licensing requirements. Gambit Weekly regrets the error.