BANKING

Bill would cap Idaho banks’ limit on derivative investments

THE AGENCY Idaho Department of Finance

THE ISSUE A number of large banks across the country lost money in derivatives during the financial meltdown in 2008. Congress responded with a requirement limiting how much money banks can sink into those investments. A derivative is a financial contract in which the payoff is based on something else, such as interest rates. A handful of Idaho’s state-regulated banks use a form of derivative called interest-rate swaps, said Gavin Gee, executive director of the Idaho Department of Finance. They can hedge against potential losses from locked-in mortgage rates if interest rates begin to rise. For example, a bank can pool loans and enter into an agreement with another party to swap fixed rates for variable ones.

WHAT’S PROPOSED Idaho has no limit on the amount of money that state-regulated banks can put into derivatives. Federal regulations, stemming from the Dodd-Frank Act, require states to make certain that bank are limited on their credit exposure to derivatives, just as they are limited on the amount of money they can lend to a single borrower. The proposed limit for a single derivative is 20 percent of a bank’s total capital — the same limit banks have on lending to a single borrower, Gee said. The proposal is in House Bill 0009, backed by the Idaho Department of Finance.

HOW YOU CAN BE HEARD The bill was referred to the House Business Committee. The committee’s phone number is 332-1139.

TO LEARN MORE Go to the Legislature’s website at http://legislature.idaho.gov and search for House Bill 0009.

CONTROLLED SUBSTANCES

Proposal would give doctors permission to exchange information on possible prescription abuse

THE AGENCY Idaho Board of Pharmacy

THE ISSUE Dispensers of controlled substances — typically pharmacies and doctors — report those transactions to the state as part of an effort to curb prescription drug abuse. The state can provide that information to pharmacists and practitioners. It is unclear whether doctors and pharmacists can provide that information to each other without involving the state.

WHAT’S PROPOSED House Bill 0016 would give pharmacies and physicians the authority to notify each other without liability for violating patient confidentiality. The system would work like this: A doctor considers whether to prescribe a controlled substance. The doctor can check on the state site to see whether the patient has sought the same medication elsewhere. If a physician discovers the patient has received similar medication from several doctors over the past few days or weeks, the physician may notify those other doctors, rather than send information to the state and wait for notification at a later date. The bill essentially cuts out the middleman — the state — to make communication more efficient, said Mark Johnston, executive director of the Pharmacy Board.

HOW YOU CAN BE HEARD Call the House Health and Welfare Committee, 332-1138. A hearing was planned shortly before press time Monday.

TO LEARN MORE Read the bill at http://bit.ly/14aLAPy