September 26, 1995 - Introduced by Senators Zien, C. Potter, Rosenzweig, Rude,
Jauch, Andrea, Burke, Chvala, Clausing, Cowles, Drzewiecki, George, Moen
and Risser, cosponsored by Representatives Ourada, Grobschmidt, Otte,
Baldus, Carpenter, La Fave, Ziegelbauer, Ainsworth, Baldwin, Baumgart,
Bell, Bock, Boyle, Goetsch, Hanson, Gronemus, Hasenohrl, Huber,
Johnsrud, Kreibich, Kreuser, Lehman, Musser, Notestein, Plombon, Ryba,
Springer, Vander Loop, Wilder, Wirch and Wood. Referred to Committee on
Education and Financial Institutions.
SB351,4,2
1An Act to repeal 186.01 (4), 186.01 (7), 186.01 (8), 186.012 (3), 186.015 (3) (e),
2186.02 (2) (a) 3. and 4., 186.02 (2) (a) 10., 186.08 (1) (e), 186.08 (2), 186.098 (6)
3(a) 1. to 6., 186.098 (9), 186.113 (1m), 186.113 (6) (intro.), 186.119, 186.17 (3),
4186.235 (1m), 186.24, 186.26 (title), 186.26 (2), 186.29 (1) (d) and (f), 186.29 (1p)
5(a) (title), 186.29 (1p) (b) (title), 186.30, 186.34 (2) and (3), 186.35 (11), 186.38
6and 186.41 (1) (b);
to renumber 186.012 (4), 186.27 (title), 186.29 (title), 186.29
7(1p) (title) and 186.29 (9);
to renumber and amend 186.012 (title), 186.012
8(1), 186.012 (2), 186.015 (2), 186.015 (3) (a), 186.015 (3) (b), 186.015 (3) (c),
9186.015 (3) (d), 186.015 (3) (f), 186.04, 186.08 (1) (intro.), 186.08 (1) (a) to (d),
10186.08 (1) (f), 186.098 (6) (a) (intro.), 186.11 (1), 186.113 (14), 186.23, 186.25,
11186.26 (1), 186.27 (intro.), (1) and (2), 186.27 (3), 186.28, 186.29 (1) (intro.), (a)
12to (c), (e) and (g) to (k), 186.29 (1m), 186.29 (1p) (a), 186.29 (1p) (b), 186.29 (2)
13(intro.) and (a), 186.29 (2) (b), 186.29 (2) (c), 186.29 (2) (d), 186.29 (3), 186.29 (4),
14186.29 (5), 186.29 (6), 186.29 (7), 186.29 (8), 186.29 (10), 186.29 (11) (intro.) and
15(a) to (d), 186.29 (12), 186.29 (13), 186.33 and 186.37;
to amend 186.01 (2),
16186.01 (3), 186.01 (3m), 186.01 (5), 186.015 (1), 186.015 (2) (a) and (b), 186.015
17(2) (c), 186.015 (3), 186.015 (4) (b), 186.015 (5), 186.02 (1), 186.02 (2) (a) 1.,
1186.02 (2) (a) 2., 186.02 (2) (a) 7., 186.02 (2) (a) 8., 186.02 (2) (a) 9., 186.02 (2)
2(b) 2., 186.02 (2) (b) 3., 186.02 (2) (c), 186.02 (2) (d), 186.02 (2) (em), 186.02 (2)
3(f), 186.02 (3) (a), 186.02 (3) (b), 186.02 (4) (a), 186.02 (4) (b), 186.03 (3), 186.06
4(4), 186.08 (3), 186.095 (1), 186.096 (2) (a), 186.098 (1), 186.098 (2), 186.098 (3),
5186.098 (4), 186.098 (5), 186.098 (8) (b), 186.098 (9m), 186.098 (10), 186.10 (2),
6186.11 (2) (b), 186.11 (4) (a), 186.11 (4) (b) (intro.), 1., 3. and 4., 186.112, 186.113
7(title), 186.113 (1), 186.113 (1s), 186.113 (5), 186.113 (6) (a) and (b), 186.113 (8),
8186.113 (9), 186.113 (11), 186.113 (12), 186.113 (13), 186.113 (17), 186.113 (18),
9186.113 (19), 186.113 (20), 186.113 (21), 186.113 (22), 186.115 (2), 186.117 (1),
10186.13, 186.14, 186.15 (2) and (3), 186.16 (2), 186.17 (2), 186.18, 186.21 (1),
11186.21 (2), 186.21 (3), 186.21 (4), 186.22 (11), 186.235 (1), 186.235 (3), 186.235
12(3m), 186.235 (4), 186.235 (5), 186.235 (7) (a) (intro.), 186.235 (7) (b), 186.235
13(9), 186.235 (10) (a) (intro.), 186.235 (10) (a) 2., 186.235 (10) (b), 186.235 (10) (c),
14186.235 (10) (d), 186.235 (12), 186.235 (13), 186.235 (14) (a), (b) and (e), 186.235
15(15) (a), 186.235 (16), 186.235 (17), 186.235 (18), 186.235 (19), 186.235 (20),
16186.31, 186.31 (2m), 186.314, 186.315, 186.32, 186.34 (1), 186.34 (4), 186.35 (8),
17186.35 (10) (c), 186.35 (12) (a), 186.35 (12m) (intro.), 186.35 (14), 186.36, 186.41
18(5m), 186.42 (1) (intro.) and (3), 186.60, 217.04 (2) and 227.24 (1) (b) and (d);
to
19repeal and recreate 186.01 (6), 186.015 (1), 186.02 (1), 186.02 (3) (a), 186.02
20(3) (b), 186.02 (4) (a), 186.02 (4) (b), 186.03, 186.06 (title), (1) and (2), 186.06 (3),
21186.07 (title), (1) and (2), 186.098 (6) (b), 186.098 (7), 186.098 (8) (b), 186.098
22(10), 186.11 (1) (e), 186.11 (2) (b), 186.112, 186.113 (1), 186.113 (2), 186.113 (2),
23186.113 (16), 186.115 (2), 186.15, 186.16 (2), 186.17 (1), 186.17 (2), 186.18,
24186.19, 186.21 (1), 186.21 (2), 186.21 (3), 186.21 (4), 186.22 (11), 186.235 (title),
25186.235 (2), 186.235 (8), 186.235 (11), 186.31 (1), 186.31 (2), 186.314 (2), (3) and
1(4), 186.315, 186.34 (4) and 186.35 (8);
to create 186.01 (3c), 186.01 (3g), 186.01
2(4m), 186.01 (7m), 186.015 (2) (c), 186.015 (3g), 186.015 (3r), 186.015 (6) (title),
3186.02 (2) (title), 186.02 (2) (a) 5d., 186.02 (2) (a) 5h., 186.02 (2) (a) 5k., 186.02
4(2) (a) 5p., 186.02 (2) (a) 5t., 186.02 (2) (a) 11m., 186.02 (3) (title), 186.02 (4)
5(title), 186.02 (4) (c), 186.06 (1m), 186.06 (2m), 186.07 (1m), 186.07 (3) (title),
6186.07 (4) to (7), 186.071, 186.08 (1m) (f), 186.08 (1m) (g), 186.083 (1) (title), (2)
7(title), (3) (title) and (4) (title), 186.086 (1) (title), 186.086 (2) (title), 186.087 (1)
8(title), (2) (title) and (3) (title), 186.088 (1) (title) and (2) (title), 186.096 (1) (title),
9186.096 (2) (title), 186.096 (3) (title), 186.098 (6) (c), 186.098 (8) (title), 186.098
10(9m), 186.098 (11) (title), 186.098 (12) (title), 186.098 (13), 186.10 (1) (title),
11186.11 (4) (c), 186.113 (1e), 186.113 (1s), 186.113 (3) (title), 186.113 (4) (title),
12186.113 (6) (title), 186.113 (6) (c), 186.113 (7) (title), 186.113 (10) (title), 186.113
13(14) (title), 186.113 (14) (b), 186.113 (14m), 186.113 (15) (title), 186.113 (23),
14186.115 (1) (title), 186.115 (3) (title), 186.117 (2) (title), 186.118 (1) (title), (2)
15(title), (3) (title) and (4) (title), 186.12 (1) (title), (2) (title) and (3) (title), 186.16
16(1) (title), 186.235 (1), 186.235 (3), 186.235 (3m), 186.235 (4), 186.235 (9),
17186.235 (10), 186.235 (11) (m) 3., 186.235 (12), 186.235 (13), 186.235 (15),
18186.235 (17), 186.235 (20), 186.235 (21) (title), 186.31 (2m), 186.325, 186.34 (5)
19(title), 186.35 (14), 186.41 (2) (a) 3., 186.42 and 186.60 of the statutes; and
to
20affect 1995 Wisconsin Act 27, section
4878,
1995 Wisconsin Act
27, sections
214881 to 4884,
1995 Wisconsin Act 27, sections 4890 to 4894,
1995 Wisconsin Act
2227, section
4898,
1995 Wisconsin Act
27, sections 4902 and 4903,
1995
23Wisconsin Act 27, sections 4915 to 4920,
1995 Wisconsin Act 27, sections 4937
24to 4988,
1995 Wisconsin Act 27, sections 4995 to 4998,
1995 Wisconsin Act 27,
25sections 5009 to 5017 and
1995 Wisconsin Act 27, section
9459 (7);
relating to:
1credit union operation and authority, reorganizing the credit union chapter,
2granting rule-making authority and providing a penalty.
Analysis by the Legislative Reference Bureau
This bill makes numerous changes that revise and reorganize the chapter that
governs the formation, operation and regulation of credit unions in this state. These
changes include the following:
Definitions
The bill revises the definition of "credit union" to specify that a credit union
provides other financial services in addition to credit.
Definitions of the terms "federal share insurance", "national board" and "risk
assets" are created or revised to be consistent with current federal law.
The bill revises the definition of "deposit account" and creates a definition of
"share deposit".
Office of the commissioner of credit unions
The bill consolidates the major responsibilities of the office of the commissioner
of credit unions (office) into one statutory section and explicitly states that credit
unions are under the supervision of the commissioner of credit unions
(commissioner). Under
1995 Wisconsin Act 27, the office of the commissioner is made
an attached division of a newly created division of financial institutions, effective
July 1, 1996. Consistent with that act, all references created in the bill to the
commissioner or to the office of the commissioner are changed, effective July 1, 1996,
to the office of credit unions.
Current law directs the commissioner to "promote the extension of credit at the
lowest possible rate". The bill deletes that promotional directive.
The bill specifies that the commissioner and deputy commissioner are to devote
full time to their duties. After July 1, 1996, this provision is amended to refer to the
administrator of the office of credit unions; references to the deputy commissioner
are repealed. The bill also requires all employes of the office to be bonded. It also
revises the authority of the commissioner to remove an officer or employe of a credit
union from his or her position, explicitly gives the commissioner subpoena power to
take testimony of witnesses and requires the commissioner to generally act on
applications made to the office within 90 days.
Credit unions are required, under the bill, to pay for examinations conducted
by the office on the day on which the examination is completed. Current law requires
payment within 30 days after the credit union is billed for the examination.
Language that requires the office to conduct annual examinations is revised.
The bill deletes a provision that allows 5 or more members of a credit union to ask
the office to conduct a special examination and adds language permitting the office
to substitute an examination conducted for the federal share (deposit) insurance
fund for the office's own examination.
Credit union review board
The bill expands the authority of the credit union review board (review board)
to conduct hearings, revises the procedures to be used for hearings and expands the
time a party may appeal a decision of the commissioner to the review board from 30
days to 60 days. The bill specifies that the review board will uphold the decision of
the commissioner if the decision is not arbitrary and capricious and is supported by
the evidence. The bill requires the review board to dispose of review applications
within 60 days of receipt.
The bill eliminates the authority of the review board to promulgate rules
affecting credit union depositors or shareholders, leaving that authority to the
commissioner, but permits the review board to promulgate rules concerning its
procedure.
Credit union organization
The bill expands the information required to be included in the bylaws. Under
the bill, a credit union's bylaws must include terms that describe the responsibilities
and qualifications of directors, director nomination and election procedures, bond
requirements for directors, meeting notice requirements and director removal
procedures.
The bill permits a credit union to move its principal office within a 20-mile
radius of its present location without obtaining the approval of its membership.
Under current law, upon the unanimous recommendation of the board of
directors, the members may vote to dissolve the credit union. Under the bill, only the
recommendation of two-thirds of the directors is required. Under current law, a
credit union may vote to dissolve itself if the total number of members voting on the
issue exceeds 50% of the total number of members eligible to vote and other
conditions are satisfied. The bill reduces the total number of members needed for a
valid dissolution vote to 25%.
Credit union membership
The bill modifies the requirements for eligibility for membership in a credit
union. In addition to groups having a common bond of occupation or association,
current law permits residents of well-defined neighborhoods, communities or rural
districts, or employes of vicinal industries, to be eligible to join a credit union. Under
the bill, individuals residing or employed in neighborhoods, communities, rural
districts or multicounty regions, or employes of related industries, are eligible to join
a credit union, in addition to groups having a common bond.
The bill permits a credit union to determine under its bylaws who is eligible for
membership as a family member of a member. The bill also permits a credit union
to expand its field of membership to states that border this state.
Under the bill, if a credit union expels a member for cause, a member has 90
days in which to appeal the expulsion. Current law does not specify a time for
appeals.
Provisions regarding annual and special membership meetings are revised
under the bill. The bill deletes certain specific provisions relating to the manner of
calling meetings and permits a credit union to hold such meetings in any manner
provided in the bylaws. Additionally, the types of issues that members may decide
at a meeting are narrowed under the bill.
Board of directors and officers
The bill specifically gives the board of directors the general oversight
responsibility and final decision-making authority for a credit union.
The bill directs the board to appoint a president of the credit union and any
necessary committee. Currently, the board is directed to appoint credit committees,
loan officers and other officers. Under the bill, most appointment authority is given
to the president of the credit union.
Eligibility for, and election to, a board of directors of a credit union is to be
determined under the bylaws in the bill. The bill creates specific criteria for
removing a director from the board and creates an appeal mechanism for a director
removed for cause from a board.
Under the bill, directors, officers and employes are required to take an oath of
office. By taking an oath, credit union personnel agree to keep member information
confidential and to avoid acting in matters in which they may have a pecuniary
interest.
Current provisions relating to the bonding of credit union officers are
eliminated under the bill and replaced with a requirement that a credit union
maintain bonds for officers that satisfy standards set by the national board that
administers the federal share (deposit) insurance fund for credit unions.
Loans to members and borrowing by credit unions
Current law specifies the value of collateral that may be used to secure a loan.
The bill eliminates this restriction on collateral levels and authorizes the board of
directors to set policies regarding acceptable collateral.
The bill expands the appeal rights of a person who has had a loan application
turned down and requires a loan appeal to be in writing. The appeal may be made
to the credit union's president and the president's decision may be appealed to the
board of directors.
Under the bill, a credit union may engage in open-end, or credit card type,
lending without the approval of the commissioner as is presently required. Credit
unions may also participate in loans with other lenders if the loan is of the type that
a credit union could make individually, subject to rules promulgated by the
commissioner.
The bill permits a credit union to have a lien against the deposit accounts of a
member and the right of setoff against those accounts to secure payment of loans
made to the member.
Current law permits a credit union to borrow money if the amount borrowed
does not exceed 50% of the credit union's total deposits and reserves and if the loan
is for less than 12 months. The bill revises this provision by reducing the borrowing
limit to 30% of total deposits and reserves and by eliminating the 12-month term
requirement. The new 30% limit may be exceeded with commissioner approval.
Credit union powers
The bill specifies that a credit union may, with the commissioner's approval,
establish branch offices inside or outside of this state. Currently, only in-state
branch offices are referred to in the branch authorization provision. The bill also
permits a credit union to establish service centers (offices at which some member
services may be obtained but at which permanent records are not kept) upon notice
to the commissioner.
The bill expands the authority of a credit union to offer safe deposit boxes, to
provide debit cards, to make government-guaranteed loans and to make donations.
The bill also expands a credit union's authority to sell and purchase assets and to
dispose of dormant accounts.
Under present law, a credit union may offer products or services that other
financial institutions offer if the commissioner finds the product or service to be
financially related. The bill retains this authority but eliminates redundant
provisions on this subject.
Reserve requirements and financial information
The present formula for establishing adequate reserve levels is eliminated in
the bill and replaced by a requirement that a credit union set aside reserves at a level
set by the national board that administers the federal share (deposit) insurance fund
for credit unions.
The bill expands current provisions relating to annual audits of a credit union.
The bill permits a board of directors to appoint an audit committee and permits the
commissioner to order an independent audit of a credit union if the commissioner
finds an annual audit to be unsatisfactory. In addition, the bill updates the
provisions that require a credit union to file financial information annually with the
commissioner.
Mergers
The bill revises the procedures for the merger of credit unions and deletes the
use of the term "consolidation" in referring to mergers. The bill authorizes the
commissioner to permit emergency mergers if one of the merging credit unions is
insolvent or in danger of causing a loss to the federal share (deposit) insurance fund,
without the affirmative vote of the membership of the merging credit union.
Other
The bill eliminates obsolete references to the American share deposit insurance
corporation, repeals account disclosure provisions, eliminates gender-specific
references and adds subsection titles throughout the credit union chapter.
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:
SB351, s. 1
1Section
1. 186.01 (2) of the statutes is amended to read:
SB351,8,32
186.01
(2) "Credit union" means a cooperative, nonprofit corporation,
3incorporated under this chapter to encourage thrift among its members, create a
1source of credit
and other financial services at a fair and reasonable
rate of interest 2cost and provide an opportunity for its members to improve their economic and social
3conditions.
SB351, s. 2
4Section
2. 186.01 (3) of the statutes is amended to read:
SB351,8,75
186.01
(3) "Deposit account" means an account
limited to members and treated
6as
a any form of savings.
Deposit accounts are subject to conditions established by
7the board of directors.
SB351, s. 3
8Section
3. 186.01 (3c) of the statutes is created to read:
SB351,8,109
186.01
(3c) "Federal share insurance" means the national credit union share
10insurance fund under
12 USC 1783.
SB351, s. 4
11Section
4. 186.01 (3g) of the statutes is created to read:
SB351,8,1212
186.01
(3g) "Fixed assets" has the meaning given in
12 CFR 701.36 (b).
SB351, s. 5
13Section
5. 186.01 (3m) of the statutes is amended to read:
SB351,8,1714
186.01
(3m) "National board" means the national credit union administration
15board of the national credit union administration established under
12 USC 1752 or
16the managing body of any successor that is authorized to provide federal share
17insurance for
state-chartered credit unions.
SB351, s. 6
18Section
6. 186.01 (4) of the statutes is repealed.
SB351, s. 7
19Section
7. 186.01 (4m) of the statutes is created to read:
SB351,8,2120
186.01
(4m) "Public depositor" means a governmental body, as defined in s.
21895.52 (1) (a), that deposits money in a public depository.
SB351, s. 8
22Section
8. 186.01 (5) of the statutes is amended to read:
SB351,8,2423
186.01
(5) "Regular reserve" means
the an irrevocable reserve set aside to cover
24losses.
SB351, s. 9
25Section
9. 186.01 (6) of the statutes is repealed and recreated to read:
SB351,9,1
1186.01
(6) "Risk assets" has the meaning given in
12 CFR 700.1 (i).
SB351, s. 10
2Section
10. 186.01 (7) of the statutes is repealed.
SB351, s. 11
3Section
11. 186.01 (7m) of the statutes is created to read:
SB351,9,64
186.01
(7m) "Share deposit" means a balance that is established and
5maintained by a person at a credit union that confers membership rights to that
6person.
SB351, s. 12
7Section
12. 186.01 (8) of the statutes is repealed.
SB351, s. 13
8Section
13. 186.012 (title) of the statutes is renumbered 186.235 (title) and
9amended to read:
SB351,9,11
10186.235 (title)
Commissioner
Office of the commissioner of credit
11unions.
SB351, s. 14
12Section
14. 186.012 (1) of the statutes is renumbered 186.235 (1m) and
13amended to read:
SB351,9,2414
186.235
(1m) (title)
Deputy commissioner. The commissioner shall appoint a
15deputy
commissioner subject to s. 15.04 (2) and (3)
who. The deputy commissioner 16shall possess all powers and perform the duties
attached to the office of the
17commissioner during a vacancy
thereof and during the absence or inability of the
18commissioner
to serve. No person may be appointed deputy commissioner who has
19not had at least one year of actual experience either in the operation of a credit union,
20or serving in a credit union supervisory capacity, or a combination of both. The
21commissioner may also employ
such examiners and clerks to assist
him or her and
22the deputy in the discharge of the
several duties
imposed upon of the commissioner
23by under this chapter
as he or she finds necessary, and who shall perform such other
24duties as the commissioner directs.
SB351, s. 15
1Section
15. 186.012 (2) of the statutes is renumbered 186.235 (2) and amended
2to read:
SB351,10,43
186.235
(2) (title)
Enforcement. The commissioner
of credit unions shall
4enforce
the laws of this chapter and other laws relating to credit unions.
SB351, s. 16
5Section
16. 186.012 (3) of the statutes is repealed.
SB351, s. 17
6Section
17. 186.012 (4) of the statutes is renumbered 186.235 (21).
SB351, s. 18
7Section
18. 186.015 (1) of the statutes is amended to read:
SB351,10,138
186.015
(1) (title)
Confer with commissioner. The commissioner shall confer
9with the credit union review board on matters affecting credit unions and the
10commissioner's office
of the commissioner. Detailed minutes of each
review board
11meeting shall be kept, and the decision of the
review board with reference to all
12orders issued, or policies established by the commissioner pursuant to this chapter
13is final, except for judicial review as provided in ch. 227.
SB351, s. 19
14Section
19. 186.015 (1) of the statutes, as affected by 1995 Wisconsin Acts 27
15and .... (this act), is repealed and recreated to read:
SB351,10,2116
186.015
(1) Confer with office. The office of credit unions shall confer with
17the credit union review board on matters affecting credit unions and the office.
18Detailed minutes of each review board meeting shall be kept, and the decision of the
19review board with reference to all orders issued, or policies established by the office
20of credit unions pursuant to this chapter is final, except for judicial review as
21provided in ch. 227.
SB351, s. 20
22Section
20. 186.015 (2) of the statutes is renumbered 186.015 (2) (intro.) and
23amended to read: