Statutory authority
Related statute or rule
None.
Explanation of agency authority
Summary of proposed rule
The objective of the rule is to create ch. DFI—Bkg 75. The purpose of the rule is to establish clear standards and requirements for payday lenders; notice and other protections to payday lending customers; and database requirements for the secure entry, retention and transmission of customer information. The rule provides definitions; identifies transactions not deemed payday loans; lists prohibited practices; sets forth loan disclosure requirements; sets forth fees and interest, and addresses defaults; sets forth the calculations to be used to determine income; provides details on repayments and repayments loans; and provides for a database and the secure transmission of information regarding payday loans.
Comparison with federal regulations
None.
Comparison with rules in adjacent states
Illinois, Michigan, Minnesota and Iowa all now regulate payday lending.
Summary of factual data and analytical methodologies
In developing these rules, the department extensively reviewed payday lending laws in states across the country. The department also received input from payday lenders and consumer organizations. Because the department regulates licensed financial services for the state, the division could also rely on extensive staff expertise and experience in drafting regulations for these entities. The department is also experienced with payday loans and payday lending practices because the department licenses these lenders.
Analysis and supporting documentation used to determine effect on small business
The mandates addressed by the rule are the result of and set forth in
2009 Wisconsin Act 405, and not by the rule. The rule does provide substantial clarity to the payday lending industry on the types of loans covered, and notice as to what practices are prohibited. The rule provides the industry with clear and itemized requirements for disclosures and repayment plans, and standard calculations for income determination. The rule provides for the safe and secure transmission of data, and the required information to be entered into the database. Permissible fees and interest are addressed, as well as default matters. Overall the information required by the rule should be readily available to payday lenders in the normal course of business. Standardizing requirements for disclosures, repayments and calculations provides both ease of transaction for the lenders and certainty for their practices. The fees, interest and default provisions likewise provide the same, and are
de minimis in comparison with the overall operational costs and income of these entities. Overall the requirements of the rule are straight-forward for ease in compliance.
Small Business Impact
The rule itself does not have a significant economic impact on small business and should have a beneficial affect for both the business and consumer.
Fiscal Estimate
The fiscal effect may increase costs which may be possible to absorb within the agency's budget, and may increase existing revenues.
Contact Person
For substantive questions on the rule, contact:
Michael J. Mach, Administrator
Dept. of Financial Institutions, Division of Banking
P.O. Box 7876
Madison, WI 53707-7876
Notice of Hearing
Government Accountability Board
NOTICE IS HEREBY GIVEN that pursuant to ss.
5.05 (1) (f),
227.11 (2) (a),
227.16, and
227.24 (4), Stats., the Government Accountability Board will hold a public hearing to consider adoption of an emergency and permanent rule to create section
GAB 1.91, Wis. Adm. Code, relating to organizations making independent disbursements.
Hearing Information
Date: August 30, 2010
Time: 9:45 a.m.
Location: Government Accountability Board Office
212 E. Washington Avenue, 3rd Floor
Madison, Wisconsin
This public hearing site is accessible to people with disabilities. If you have special needs or circumstances that may make communication or accessibility difficult at the hearing, please contact the person listed below.
Submittal of Written Comments
Comments are to be submitted to Government Accountability Board, Attn: Shane W. Falk, 212 E. Washington Avenue, 3rd Floor, P.O. Box 7984, Madison, Wisconsin 53707-7984, no later than August 30, 2010.
Analysis Prepared by the Government Accountability Board
Statutes interpreted
Sections
11.01(4) and
(18m),
11.05,
11.055,
11.06,
11.09,
11.10,
11.12,
11.14,
11.16,
11.19,
11.20,
11.21(16),
11.30,
11.38,
11.513, Stats.
Statutory authority
Explanation of agency authority
Express rule-making authority to interpret the provisions of statutes the Board enforces or administers is conferred on it pursuant to s.
227.11(2)(a), Stats. In addition, s.
5.05(1)(f), Stats., provides that the Board may promulgate rules under ch.
227, Stats., for the purpose of interpreting or implementing the laws regulating the conduct of elections or election campaigns or ensuring their proper administration.
In
Citizens United v. FEC, 558 U.S. ___, (No. 08-205)(January 21, 2010), the United States Supreme Court greatly expanded the rights of organizations to engage in independent expenditures and strengthened the ability of the government to require disclosure and disclaimer of the independent expenditures. Pursuant to s.
5.05(1), the Board has the responsibility for the administration of campaign finance statutes in ch.
11, Stats. Rules promulgated by the Board will ensure the proper administration of the campaign finance statutes and properly address the application of
Citizens United v. FEC.
Related statute(s) or rule(s)
Chapter
11, Stats., and Chapter
GAB 1, Wis. Adm. Code.
Plain language analysis
Within the context of ch.
11, Stats, the proposed order will provide direction to organizations receiving contributions for independent disbursements or making independent disbursements following the U.S. Supreme Court decision in
Citizens United v. FEC, 558 U.S. ___, (No. 08-205)(January 21, 2010). The proposed rule enumerates registration, reporting, and disclaimer requirements of provisions of ch.
11, Stats., which apply to organizations receiving contributions or making independent disbursements. Comporting with
Citizens United, the proposed rule does not treat persons making independent disbursements as full political action committees or individuals under s.
11.05, Stats., for the purposes of registration and reporting. With respect to contributions or in-kind contributions received, this proposed rule requires organizations to disclose only donations “made for" political purposes, but not donations received for other purposes.
Comparison with federal regulations
At the federal level, the FEC provides rules at
11 CFR 109.10, which regulate persons who are not a committee and make independent expenditures. An independent expenditure statement and reports quarterly are required for any person making independent expenditures in excess of an aggregate $250.00 in a calendar year. If a person makes an independent expenditure of $10,000.00 or more, an independent expenditure statement and report must be filed within 48 hours of the expenditure. Any person making an independent expenditure of $1,000.00 or more within 20 days of an election must file an independent statement and report within 24 hours of the expenditure. The independent expenditure statement must include the identity of the person making the expenditure, any contributions received in excess of $200.00, and the candidate benefitted by the expenditure. In addition, a disclaimer is required for any communication resulting from an independent expenditure.
Comparison with rules in adjacent states
Illinois:
Section 5/9-1.5, Ill. Adm. Code, defines “expenditure" generally and to include an electioneering communication regardless of whether the communication is made in concert or cooperation with, or at the request, suggestion or knowledge of a candidate, a candidate's authorized local political committee, a State political committee, or any of their agents. Sections 5/9-1.7 and 1.8, Ill. Adm. Code, define local and State political committees to include a candidate, individual, trust, partnership, committee, association, corporation, or any other organization or group of persons which accept contributions or make expenditures on behalf of or in opposition to a candidate and exceeding an aggregate of $3,000.00 in any 12 month period. Persons making independent expenditures in Illinois are by definition committees and subject to substantially similar registration, reporting, and disclaimer requirements as committees in Wisconsin.
Iowa:
Chapter
351—4.27 of the Iowa Administrative Code sets forth requirements for registration and reporting of independent expenditures and it applies to any person, other than a candidate or registered committee, that makes one or more independent expenditures in excess of $100.00 in the aggregate. 351—4.27, Iowa Adm. Code. A person subject to filing an independent expenditure statement must identify the person making the expense and for whom it benefits. 351—4.27(2), Iowa Adm. Code. There is no requirement to file a statement of organization registering a committee or public disclosure reports. 351—4.27(7), Iowa Adm. Code. A disclaimer on communications is required. 351—4.27(6), Iowa Adm. Code.
Michigan:
Michigan statutes regulate independent expenditures, but the administrative rules do not specifically address them. Michigan Statutes s.
169.208 provides a definition for an “independent committee," which upon exceeding $500.00 in contributions or expenditures is subject to substantially similar registration, reporting, and disclaimer requirements as committees in Wisconsin.
Minnesota:
Minnesota statutes regulate independent expenditures, but the administrative rules do not specifically address them.
Summary of factual data and analytical methodologies
Adoption of the rule was predicated on state statutes and federal case law.
Analysis and supporting documentation used to determine effect on small businesses
The rule may have a minimal effect on small businesses that will participate in receiving contributions or making independent disbursements. The economic impact of this effect is minor. Businesses may have a filing fee of $100.00, if the amount of aggregate independent disbursements made in any year exceeds $2,500.00.
Small Business Impact
The creation of this rule may have a minimal effect on small businesses as explained above.
Initial regulatory flexibility analysis
The creation of this rule does not affect the normal operations of business.
Fiscal Estimate
The creation of this rule has minimal fiscal effect. There may be additional registrants filing reports with the Board and potentially additional enforcement actions that may require staff action. The extent of this potential fiscal impact is undetermined.
Text of Proposed Rule
SECTION 1. GAB 1.91 is created to read:
1.91 Organizations Making Independent Disbursements. (1) In this section:
(a) “Contribution" has the meaning given in s. 11.0 1(6), Stats.
(b) “Disbursement" has the meaning given in s.
11.01 (7), Stats.
(c) “Filing officer" has the meaning given in s.
11.01 (8), Stats.
(d) “Incurred obligation" has the meaning given in s.
11.01 (11), Stats.
(e) “Person" includes the meaning given in s.
990.01 (26), Stats.
(f) “Organization" means any person other than an individual, committee, or political group subject to registration under s.
11.23, Stats.
(g) “Independent" means the absence of acting in cooperation or consultation with any candidate or authorized committee of a candidate who is supported or opposed, and is not made in concert with, or at the request or suggestion of, any candidate or any agent or authorized committee of a candidate who is supported or opposed.
(h) “Designated depository account" means a depository account specifically established by an organization to receive contributions and from which to make independent disbursements.
(2) A corporation, or association organized under ch.
185 or
193, Stats., is a person and qualifies as an organization that is not prohibited by s.
11.38 (1) (a) 1., Stats., from making independent disbursements until such time as a court having jurisdiction in the State of Wisconsin rules that a corporation, or association organized under ch.
185 or
193, Stats., may constitutionally be restricted from making an independent disbursement.
(3) Upon accepting contributions made for, incurring obligations for, or making an independent disbursement exceeding $25 in aggregate during a calendar year, an organization shall establish a designated depository account in the name of the organization. Any contributions to and all disbursements of the organization shall be deposited in and disbursed from this designated depository account. The organization shall select a treasurer for the designated depository account and no disbursement may be made or obligation incurred by or on behalf of an organization without the authorization of the treasurer or designated agents. The organization shall register with the board and comply with s.
11.09, Stats., when applicable.
(4) The organization shall file a registration statement with the appropriate filing officer and it shall include, where applicable:
(a) The name, street address, and mailing address of the organization.
(b) The name and mailing address of the treasurer for the designated depository account of the organization and any other custodian of books and accounts for the designated depository account.
(c) The name, mailing address, and position of other principal officers of the organization, including officers and members of the finance committee, if any.
(d) The name, street address, mailing address, and account number of the designated depository account.
