Acting Gov. Codey’s Popularity Soars
Lame Duck Status Worries Business Groups
Acting Gov. Richard Codey has taken quick steps to right the course of New Jersey state government by calling for measures to address corruption, budget difficulties and other matters important to his constituents.
It has worked and worked well. His regular-guy persona has propelled his approval rating, in fact, 76 percent of registered voters approve of the way Codey is demonstrating his skills as New Jersey’s chief executive.
Even more surprisingly, Codey’s approval ratings among Republicans and Independents were higher than that of his own party. But even with all of the positive reaction by the residents of New Jersey, Codey will step down after his term, clearing the way for Sen. Jon Corzine to pursue the Democratic Party’s nomination for governor. It is assumed Codey will go back to being president of the Senate.
As the beginning of budget negotiations move forward, Codey has already begun to float some trial balloons regarding specific items for the $4 billion budget deficit. One of the items under consideration is taxing 401k’s, which could become very contentious considering those funds are earmarked for an individual’s retirement.
Another item under consideration is selling off portions of the turnpike, but the overall uneasiness lies in the fact that Codey can make tough budget decisions and not have to answer to his constituents since announcing he would not be running for governor.
Many business groups are of the mind that they “gave at the office” under former Gov. McGreevy, and that state government should now look to restore some fiscal order by not increasing spending and making sensible cuts to offset some of the projected deficits. Codey had asked for private sector help with some talented individuals giving him advice. NJBankers believes that positive step will hopefully lead to other good cost-saving measures.
Additionally, Codey has initiated plans to curtail any government travel to save $1million, and he is also freezing state hiring. While those are good initiatives going forward, Codey has asked for a proposed $1 billion increase in funding for stem cell research that could rile his critics. It was just last year that McGreevy taxed tires, cell phones, plastic surgery and real estate – all the while increasing spending by close to 40 percent.
A BUSY LEGISLATURE
There has been quite a bit of activity in the Legislature recently with bills looking to help reservists in active military duty by waiving the mortgage interest payments, a credit card consent bill, and still the rumors of an all-inclusive financial privacy bill, which could be very troubling to all banks big and small.
The Assembly Military and Veterans Committee released A-3553 (Johnson) on Jan. 13. Assemblyman Gordon Johnson’s well-intentioned bill allows reservists to receive a suspension of the payment of interest on a mortgage loan that was secured before they entered military service. The bill was amended on the floor of the assembly to include that the mortgages are only on primary residences.
Assembly Bill 3454 (Cohen) was released from the Assembly Consumer Affairs Committee on Jan. 10. The bill would make it unlawful practice for a person to issue a credit card to an individual under 21 years of age. NJBankers opposed the bill in committee and testified that it is very important for a young adult to build a credit history. We also testified to the importance of parents and children discussing the facts about credit cards, and how they must avoid purchases that are unnecessary and use the card for emergency reasons. Many credit card companies have minimum balance cards as well as cards that send statements to the parent and young adult.
Financial privacy legislation is supposedly going to be heard in early March. NJBankers has many concerns with the legislation and is working with a large coalition to mitigate the impact of the onerous bills. Also, a preemption challenge has failed in California and is currently under appeal. NJBankers believes the Legislature should proceed slowly knowing that the bills could have serious impact on commerce in New Jersey.
SOUTH JERSEY ACTION BANKER COUNCIL MEETS WITH REP. ROB ANDREWS
The NJBankers Action Banker Councils have been regularly meeting with legislators throughout the state and having great discussions on issues important to the industry. In fact, the Southern Council under Chairman Mike Quick of Susquehanna Patriot Bank recently met with Congressman Rob Andrews to discuss credit unions and Sarbanes-Oxley.
Andrews suggested that NJBankers review the federal legislation regarding the expansion of the powers of the credit unions. The congressman believes that federal credit union regulators may be liberalizing the interpretation of the most recent version of the bill and that the ABA and NJBankers should petition the regulator for that interpretation.
There was also good discussion on Sarbanes-Oxley with Andrews in that there is nothing we can do about the original law, but that we can work with the federal trade groups to create “safe harbor legislation.” Also, he suggested we work with ABA in developing a “white paper” outlining our proposal, and that he would even assist our office in presenting it to the appropriate groups in Washington. It was a very productive meeting and we thank Congressman Andrews for taking time out of his very busy schedule.
The IOLTA issue has become a very hot topic as of late due to the threatening letters that have been sent to banks by the IOLTA board. The NJBankers Government Relations Committee has created an ad hoc committee to address the issue, and just recently met with the IOLTA board at the New Jersey Law Center. We had a very informative meeting in that we were able to ask questions regarding the .75 rate index the IOLTA board has set.
The discussion also centered on the de-authorization process and what would happen if a bank did not comply with the suggested rate. Additionally, we asked about what mechanisms of appeal banks have and who actually initiates the process of de-authorization.
One very important conclusion was that the IOLTA board has no jurisdiction to begin that process and that it must come from the Supreme Court. NJBankers counsel Mary Kay Roberts and I will be looking to hold further discussion on the issue, but in the interim, the NJBankers board of trustees will look closely at the issue and make recommendations on how to proceed.
Robert J. Tartaglia is vice president and director of government relations for the New Jersey Bankers Association. He can be reached by e-mail at firstname.lastname@example.org.