Advocating for Community Banks

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2025 Legislative Successes 

CCBN had significant success this year in defeating, mitigating, or delaying the bills that would negatively impact community banks.  All but one of the bills CCBN opposed did not make it to the Governor, which is noteworthy given the volume of legislation introduced this year that would make it more difficult for community banks to serve their customers and do business in California.  These bills and their outcomes are outlined below.

Defeated Interchange Fee Ban 

CCBN and other financial institution stakeholders successfully defeated 1065 (Ortega), which sought to ban interchange fees on the tax portion of transactions. The bill failed in the Assembly Banking Committee, receiving zero “aye” votes. CCBN played a key role in educating legislators about the measure’s unintended consequences—specifically, that large national banks would likely be preempted, leaving state-chartered banks and credit unions to bear the disproportionate impact. Earlier, CCBN provided lead testimony in the Assembly Judiciary Committee, highlighting how the bill would have increased costs and compliance burdens for community-based financial institutions.

 Defeated CalAccount Program Legislation

AB 1365 (Garcia) would have implemented the CalAccount Program in California, which would have provided every Californian with access to a voluntary, no-cost, zero-fee, zero-penalty, federally insured transaction account and related payment services, and (b) would have required employers to facilitate program sign-up for employees and comply with employees’ direct deposit elections.  CCBN advocated in opposition to the bill and provided lead opposition testimony in both the Assembly Banking and Finance Committee and the Assembly Labor and Employment Committee.  We argued that the bill was unnecessary given that Californians already have access to low or no-cost accounts at banks and credit unions.  It was held on the Assembly Appropriations Committee Suspense File and is dead.

 Delayed Consideration of a Statewide Community Reinvestment Act Proposal 

CCBN worked with the California Bankers Association, credit unions and others to advocate in opposition to AB 801 (Bonta), which seeks to establish the California Community Reinvestment Act.  It would require a covered financial institution to have a continuing and affirmative obligation to meet the financial services needs of the communities, including low- and moderate-income communities and communities of color, in which the covered financial institution conducts substantial business, as specified. The bill would also prohibit a covered financial institution with certain ratings from receiving state funds for deposit or being awarded a state contract to provide financial services.  Due to our concerns, the author agreed to table the bill for the year.  Although it is dormant now, it is eligible to be considered in 2026. We will continue to advocate in opposition to the bill. 

 Tabled Elder Financial Abuse Legislation

CCBN played a key role in making AB 909 (Schiavo) a two-year bill. The measure sought to add “induced transactions” to the coerced debt statute and would have limited an account holder’s liability to $50 for a broad range of fraudulent transactions, including funds transfers, cash withdrawals, and credit extensions. CCBN, along with other affected stakeholders, met with the chair of the Assembly Banking and Finance Committee to outline serious concerns about the bill’s broad scope and unintended impacts on financial institutions. As a result, the chair chose not to set the bill for a hearing, effectively halting it for 2025. AB 909 remains eligible for reconsideration in 2026, when CCBN will continue to oppose the measure.

 Mitigated Mortgage Forbearance Legislation

In July, AB 985 (Schiavo) was gutted and amended to allow homeowners near the Chiquita Canyon Landfill to receive loan forbearance without a federally declared state of emergency. This would have created significant legal liability and compliance-related impediments for mortgage servicers.  Further,

the state cannot compel the federal government, by way of mortgage servicers, to offer mortgage forbearance that conflicts with federal requirements.   CCBN and other impacted stakeholders lobbied the bill collectively and ultimately the mortgage forbearance provisions were removed from the bill. 

Delayed Automated Decision Systems Proposal

CCBN advocated at the end of the legislative session in opposition to AB 1018 (Bauer-Kahan), which seeks to regulate automated decision systems (ADSs).  It could increase the cost of providing credit to California residents and compromise cybersecurity and anti-fraud efforts of financial institutions already abiding by robust federal and state laws, regulations, and supervisory guidance that are applicable to the use of all technologies, including ADSs. The author pulled the bill because it was at risk of failing on the Senate floor due to our advocacy and the opposition of the larger business community. Although it is dead for the year, it will be eligible to be taken up in January. 

Looking Ahead

Lawmakers will return to Sacramento on January 5 for the second year of the 2025-26 legislative session. Although CCBN had numerous successes this year, several onerous proposals will be able to be considered in January, so we must remain vigilant in our advocacy.  We will continue to fight any legislation that disproportionately impacts community banks and threatens the state charter.  This will include a concentrated effort to educate legislators regarding the benefits of community banks and the services they provide their communities.