LRB-4398/1
KSH:skg:kaf
1995 - 1996 LEGISLATURE
October 2, 1995 - Introduced by Representatives Kaufert, Gard, Olsen, Goetsch,
Green, Kreibich, Lehman, Hahn, Vrakas, Seratti, Grothman and Ward,
cosponsored by Senator Darling, by request of Commissioner of Savings and
Loan. Referred to Committee on Financial Institutions.
AB596,1,10
1An Act to renumber 214.30 (1);
to amend 214.04 (22), 214.095 (2), 214.305,
2214.33 (2) (c), 214.485 (9), 214.49 (4), 214.49 (5) (intro.), 214.49 (8), 214.49 (9),
3214.49 (12), 214.49 (14), 214.49 (15), 214.545, 214.625, 214.63, 214.65 (2) (a) and
4(b), 214.665 (1), 214.67, 214.755 (2), 214.76 (4m) and 214.93;
to repeal and
5recreate 214.305, 214.345 (5), 214.345 (5), 214.485 (9), 214.49 (5) (intro.),
6214.49 (12), 214.49 (14), 214.49 (15), 214.545, 214.625, 214.63, 214.65 (2) (a) and
7(b), 214.665 (1), 214.67 and 214.93; and
to create 214.30 (1) (b), 214.49 (9m),
8214.755 (1m) and 214.76 (4m) of the statutes;
relating to: savings bank
9chapter revisions, providing an exemption from rule-making procedures and
10providing a penalty.
Analysis by the Legislative Reference Bureau
This bill makes several revisions to the savings bank chapter created by
1991
Wisconsin Act 221. The revisions include:
1. Permitting a savings bank to make consumer loans in a total amount that
is greater than 10% of the savings bank's total assets, if the commissioner of savings
and loan (the regulating authority) authorizes the lending. Currently, the 10% limit
may not be exceeded.
2. Permitting a savings bank to maintain collection agency trust accounts.
3. Extending provisions that provide reasonable indemnification to directors,
officers and employes to also provide limitations on the liability of directors and
officers in connection with their duties and eliminating certain types of proceedings
for which indemnification is not extended.
4. Providing for imprisonment for up to 20 years as a penalty for making a false
statement or report under the chapter. Civil forfeitures are the only penalties that
currently apply to false statements.
5. Requiring members or stockholders of a savings bank who previously gave
a proxy for their votes to disclose their intention to vote personally, instead of by
proxy, if they attend a meeting at which a vote will be taken.
6. Changing the approval process for savings bank reorganizations. Currently,
for most issues affecting a savings bank, a member or shareholder that is entitled to
vote on the issue holds one vote for every $100 of deposits in the savings bank. An
exception to this rule involves a savings bank reorganization. Current law says that
a savings bank reorganization must be approved by a majority of all voting members
or shareholders. The bill revises this procedure by specifying that a savings bank
reorganization must be approved by a majority of all votes entitled to be cast.
7. Permitting a savings bank to hold an annual or special meeting of members
or stockholders at the home office of the savings bank or at another location in a
county in which the savings bank maintains an office. Currently, annual or special
meetings may be held at the home office or at another location in the county in which
the home office is located.
8. Providing that members of a mutual savings bank have the right to share
in the net profit of the bank, after payment of creditors, if the bank liquidates.
9. Making various changes to permissible investments for savings banks.
Under current law, savings banks may invest in short-term commercial paper if the
paper is rated in one of the 4 highest categories by a nationally recognized rating
service. This provision is amended to require that the paper be rated in the 2 highest
categories. A new provision is added authorizing savings banks to invest in shares
of stock in a corporation providing the savings bank with electronic banking or other
electronic financial services. Current law allows savings banks to invest in financial
forwards, futures, options and other financial products for the purpose of reducing,
hedging or otherwise managing its interest rate risk exposure. Except for forward
contracts, this bill requires prior written approval of the commissioner before a
savings bank may invest in these instruments. Current law permits a savings bank
to invest in marketable investment securities, if the total amount of these securities
of any one issuer does not exceed 5% of the savings bank's capital. This bill changes
the percentage limit to 10%. Current law also limits the total aggregate amount of
these types of investment to 15% of the savings bank's capital. This bill lowers this
percentage threshold to 10%, but allows savings banks to exceed this amount with
the prior written approval of the commissioner.
10. Changing the commissioner's authority with respect to setting permissible
levels of investment and permissible concentrations of assets of savings banks.
Current law allows the commissioner to determine these permissible levels and
concentrations of assets by rule. This bill provides that these maximum levels and
concentrations need not be set by rule.
11. Changing certain provisions in current law regarding mergers of savings
banks so that they only apply to mergers of stock savings banks.
12. Prohibiting officers or employes of a savings bank from disclosing the
contents of an examination report except to law enforcement or prosecutorial
agencies, courts, their attorneys and accountants, and the saving bank's deposit
insurance corporation. Persons who violate this prohibition forfeit their office or
position.
13. Authorizing the commissioner to order an audit of a savings bank at any
time the commissioner considers it advisable. The savings bank is required to pay
for the cost of the audit and to file a copy of the audit report with the commissioner.
Current law requires savings banks to conduct annual audits. This bill authorizes
the commissioner to conduct the audit, if requested by the savings bank's board of
directors. The commissioner is required to charge the savings bank for the audit the
same rate as for examinations by the commissioner.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB596, s. 1
1Section
1. 214.04 (22) of the statutes is amended to read:
AB596,3,52
214.04
(22) To maintain real estate broker trust accounts under s. 452.13,
3attorney trust accounts under s. 757.293,
collection agency trust accounts under s.
4218.04 (9g), burial trust accounts under s. 445.125 and care funds and preneed trust
5funds under s. 157.19.
AB596, s. 2
6Section
2. 214.095 (2) of the statutes is amended to read:
AB596,3,127
214.095
(2) In order to effect a reorganization under sub. (1), the board of
8directors of the original savings bank shall approve a plan providing for the
9reorganization. The plan shall be submitted for approval by a majority of
the voting 10all votes entitled to be cast by members or stockholders of the savings bank at a
11meeting held in accordance with the savings bank's articles of incorporation and
12bylaws.
AB596, s. 3
13Section
3. 214.30 (1) of the statutes is renumbered 214.30 (1) (a).
AB596, s. 4
14Section
4. 214.30 (1) (b) of the statutes is created to read:
AB596,4,5
1214.30
(1) (b) A member has the right to share in the net profit of a mutual
2savings bank, after payment of creditors, if the savings bank liquidates. This right
3does not permit a member to claim a share of net profits absent a liquidation and does
4not permit a member to seek liquidation except in any manner permitted by the
5mutual savings bank's articles of incorporation or bylaws.
AB596, s. 5
6Section
5. 214.305 of the statutes is amended to read:
AB596,4,16
7214.305 Annual and special meetings. The date of the annual meeting of
8members or stockholders shall be specified in the bylaws. Failure to hold an annual
9meeting may not cause a dissolution of the savings bank. Special meetings may be
10called by the board of directors, by stockholders of not less than 20% of the
11outstanding stock, by members constituting not less than 20% of the eligible votes
12or by any other person designated in the bylaws. The commissioner may call a special
13meeting with not less than 7 days' written or oral notice. An annual or special
14meeting shall be held at the home office of the savings bank or
in at another place
15within
the same a county
in which the savings bank maintains an office if specifically
16designated in the notice of the meeting.
AB596, s. 6
17Section
6. 214.305 of the statutes, as affected by 1995 Wisconsin Acts 27 and
18.... (this act), is repealed and recreated to read:
AB596,5,3
19214.305 Annual and special meetings. The date of the annual meeting of
20members or stockholders shall be specified in the bylaws. Failure to hold an annual
21meeting may not cause a dissolution of the savings bank. Special meetings may be
22called by the board of directors, by stockholders of not less than 20% of the
23outstanding stock, by members constituting not less than 20% of the eligible votes
24or by any other person designated in the bylaws. The division may call a special
25meeting with not less than 7 days' written or oral notice. An annual or special
1meeting shall be held at the home office of the savings bank or at another place within
2a county in which the savings bank maintains an office if specifically designated in
3the notice of the meeting.
AB596, s. 7
4Section
7. 214.33 (2) (c) of the statutes is amended to read:
AB596,5,95
214.33
(2) (c) For any meeting at which the member or stockholder who gave
6a proxy is present, provided that before the taking of any vote, notice of the member's
7or stockholder's attendance
and intention to vote at the meeting is given by that
8person to an official whom the savings bank shall identify at the meeting as having
9responsibility for maintaining a record of attendance.
AB596, s. 8
10Section
8. 214.345 (5) of the statutes is repealed and recreated to read:
AB596,5,1611
214.345
(5) (a) Subject to the approval of the commissioner, a savings bank's
12bylaws shall provide for reasonable indemnification to its officers, directors and
13employes in connection with the faithful performance of their duties for the savings
14bank. For stock savings banks, the provisions shall be consistent with those under
15ss. 180.0850 to 180.0859. For mutual savings banks, the provisions shall be
16consistent with those under ss. 215.512 to 215.525.
AB596,5,2117
(b) The provisions relating to the limited liability of directors under s. 180.0828,
18as they apply to a director of a corporation, apply to a director of a stock savings bank.
19The provisions relating to the limited liability of directors and officers under s.
20215.525, as they apply to a director or officer of a mutual savings and loan
21association, apply to a director or officer of a mutual savings bank.
AB596, s. 9
22Section
9
. 214.345 (5) of the statutes, as affected by 1995 Wisconsin Acts 27
23and .... (this act), is repealed and recreated to read:
AB596,6,424
214.345
(5) (a) Subject to the approval of the division, a savings bank's bylaws
25shall provide for reasonable indemnification to its officers, directors and employes
1in connection with the faithful performance of their duties for the savings bank. For
2stock savings banks, the provisions shall be consistent with those under ss. 180.0850
3to 180.0859. For mutual savings banks, the provisions shall be consistent with those
4under ss. 215.512 to 215.525.
AB596,6,95
(b) The provisions relating to the limited liability of directors under s. 180.0828,
6as they apply to a director of a corporation, apply to a director of a stock savings bank.
7 The provisions relating to the limited liability of directors and officers under s.
8215.525, as they apply to a director or officer of a mutual savings and loan
9association, apply to a director or officer of a mutual savings bank.
AB596, s. 10
10Section
10. 214.485 (9) of the statutes is amended to read:
AB596,6,1411
214.485
(9) Through secured or unsecured loans for personal, family or
12household purposes if the total of all loans granted under this subsection does not
13exceed 10% of the savings bank's total assets
, unless a greater amount is authorized
14in writing by the commissioner.
AB596, s. 11
15Section
11. 214.485 (9) of the statutes, as affected by 1995 Wisconsin Act ....
16(this act), is repealed and recreated to read:
AB596,6,2017
214.485
(9) Through secured or unsecured loans for personal, family or
18household purposes if the total of all loans granted under this subsection does not
19exceed 10% of the savings bank's total assets, unless a greater amount is authorized
20in writing by the division.
AB596, s. 12
21Section
12. 214.49 (4) of the statutes is amended to read:
AB596,7,622
214.49
(4) In bonds, notes or other evidences of indebtedness which are a
23general obligation of any city, town, village, county, technical college district or school
24district in this state.
The total liability of any such A savings bank's total
25investments in a local governmental unit may not at any time exceed 50% of the
1capital of the savings bank.
The A savings bank's total
amount of investment in 2temporary borrowings of
any such a local governmental unit maturing within one
3year from the date of issue may not exceed 60% of the capital of the savings bank.
4 Temporary borrowings and longer-term general obligation borrowings of a single
5local governmental unit may be considered separately in arriving at the limitations
6under this subsection.
AB596, s. 13
7Section
13. 214.49 (5) (intro.) of the statutes is amended to read:
AB596,7,228
214.49
(5) (intro.) With the prior written consent of the commissioner,
a savings
9bank may invest in the initial purchase and development, or the purchase or
10commitment to purchase after completion, of home sites and housing for sale or
11rental, including projects for the reconstruction, rehabilitation or rebuilding of
12residential properties to meet the minimum standards of health and occupancy
13prescribed by a local governmental unit, the provision of accommodations for retail
14stores, shops and other community services that are reasonably incident to that
15housing, or in the stock of a corporation that owns one or more of those projects and
16that is wholly owned by one or more financial institutions. The total investment in
17any one project may not exceed 15% of the savings bank's capital, nor may the
18aggregate investment under this subsection exceed 50% of its capital. A savings
19bank may not make an investment under this subsection unless it is in compliance
20with the capital requirements under s. 214.43 and with the capital maintenance
21requirements of its deposit insurance corporation. The commissioner may approve
22the investment only if the savings bank shows all of the following:
AB596, s. 14
23Section
14. 214.49 (5) (intro.) of the statutes, as affected by 1995 Wisconsin
24Acts 27 and .... (this act), is repealed and recreated to read:
AB596,8,15
1214.49
(5) (intro.) With the prior written consent of the division, in the initial
2purchase and development, or the purchase or commitment to purchase after
3completion, of home sites and housing for sale or rental, including projects for the
4reconstruction, rehabilitation or rebuilding of residential properties to meet the
5minimum standards of health and occupancy prescribed by a local governmental
6unit, the provision of accommodations for retail stores, shops and other community
7services that are reasonably incident to that housing, or in the stock of a corporation
8that owns one or more of those projects and that is wholly owned by one or more
9financial institutions. The total investment in any one project may not exceed 15%
10of the savings bank's capital, nor may the aggregate investment under this
11subsection exceed 50% of its capital. A savings bank may not make an investment
12under this subsection unless it is in compliance with the capital requirements under
13s. 214.43 and with the capital maintenance requirements of its deposit insurance
14corporation. The division may approve the investment only if the savings bank
15shows all of the following:
AB596, s. 15
16Section
15. 214.49 (8) of the statutes is amended to read:
AB596,8,2017
214.49
(8) In short-term commercial paper having a maturity from 2 to 270
18days issued by a financial institution, corporation or other borrower. An investment
19under this subsection shall be in securities rated in one of the
4 2 highest categories
20by a nationally recognized rating service.
AB596, s. 16
21Section
16. 214.49 (9) of the statutes is amended to read:
AB596,9,222
214.49
(9) A savings bank may purchase shares of, or otherwise acquire In an
23equity interest in, an insurance company
and in or an insurance holding company
24organized to provide insurance for savings banks and persons affiliated with savings
25banks solely to the extent that ownership is a prerequisite to obtaining directors' and
1officers'
insurance or blanket bond insurance
for the savings bank through the
2company.
AB596, s. 17
3Section
17. 214.49 (9m) of the statutes is created to read:
AB596,9,64
214.49
(9m) In shares of stock, whether purchased or otherwise acquired, in
5a corporation providing the savings bank with electronic banking or other electronic
6financial services.
AB596, s. 18
7Section
18. 214.49 (12) of the statutes is amended to read:
AB596,9,118
214.49
(12) In
forward commitments and, with the prior written approval of
9the commissioner, in financial futures transactions, financial options transactions
,
10forward commitments or other financial products for the purpose of reducing,
11hedging or otherwise managing its interest rate risk exposure.
AB596, s. 19
12Section
19. 214.49 (12) of the statutes, as affected by 1995 Wisconsin Act ....
13(this act), is repealed and recreated to read:
AB596,9,1714
214.49
(12) In forward commitments and, with the prior written approval of
15the division, in financial futures transactions, financial options transactions or other
16financial products for the purpose of reducing, hedging or otherwise managing its
17interest rate risk exposure.
AB596, s. 20
18Section
20. 214.49 (14) of the statutes is amended to read:
AB596,9,2319
214.49
(14) In marketable investment securities, if the total amount of those
20securities of any one issuer or obligor does not exceed
5% 10% of the savings bank's
21capital
and the. The aggregate amount of investments under this subsection
does 22combined with other commercial loans may not exceed
15% 10% of
capital the
23savings bank's total assets without the prior written approval of the commissioner.
AB596, s. 21
24Section
21. 214.49 (14) of the statutes, as affected by 1995 Wisconsin Act ....
25(this act), is repealed and recreated to read:
AB596,10,5
1214.49
(14) In marketable investment securities, if the total amount of those
2securities of any one issuer or obligor does not exceed 10% of the savings bank's
3capital. The aggregate amount of investments under this subsection combined with
4other commercial loans may not exceed 10% of the savings bank's total assets
5without the prior written approval of the division.
AB596, s. 22
6Section
22. 214.49 (15) of the statutes is amended to read:
AB596,10,97
214.49
(15) In any other investment authorized by
rule of the commissioner
.
8The commissioner need not promulgate lists of authorized investments as rules
9under ch. 227.
AB596, s. 23
10Section
23. 214.49 (15) of the statutes, as affected by 1995 Wisconsin Acts 27
11and .... (this act), is repealed and recreated to read:
AB596,10,1312
214.49
(15) In any other investment authorized by the division. The division
13need not promulgate lists of authorized investments as rules under ch. 227.
AB596, s. 24
14Section
24. 214.545 of the statutes is amended to read:
AB596,10,23
15214.545 (title)
Rules Permissible levels of investments. The
16commissioner shall
promulgate rules to determine permissible levels of investment
17and permissible concentrations of assets for savings banks that apply to all lending
18and investment authority under this subchapter. The
rules commissioner shall give
19due regard to capital adequacy, operating income, underwriting standards, risk
20inherent in the investment or loan, and competitive parity with other financial
21institutions
when setting permissible levels. The commissioner need not promulgate
22permissible levels of investment or permissible concentrations of assets as rules
23under ch. 227.