PR - $232,000
Governor: Adjust the agency's base budget for: (a) turnover reductions (-$178,700 annually); (b) nonrecurring costs (-$282,300 annually); (c) full funding of salaries and fringe benefits ($281,500 annually); (d) financial services charge-backs ($4,300 annually); (e) reclassifications ($6,100 in 1999-00 and $7,600 in 2000-01); (f) fifth week of vacation as cash ($44,300 in 1999-00 and $46,800 in 2000-01); and (g) full funding of leases and directed move costs ($6,800 annually).
2. ADDITIONAL TECHNOLOGY INITIATIVES
PR $378,700
Governor: Provide $186,500 in 1999-01 and $192,200 in 2000-01 for additional technology initiatives. The recommendation would provide one-time financing to: (a) implement the statewide electronic forms initiative of the Department of Administration ($76,900 in 1999-00 and $79,800 in 2000-01); and (b) develop a shared system to provide administrative functions needed throughout the agency ($87,600 in 1999-00 and $48,800 in 2000-01). In addition, the recommendation would enable the Office of Credit Unions (OCU) to acquire computer equipment for OCU examination staff through the state’s master lease program ($22,000 in 1999-00 and $63,600 in 2000-01).
3. CREDIT UNION INDIRECT COSTS
PR $296,000
Governor: Provide $148,000 annually to cover indirect costs of the Office of Credit Unions for administrative, information technology and other services from the Department’s Administrative Services Division.
4. OPTICAL IMAGING PROJECT
PR $280,000
Governor: Provide one-time financing of $173,500 in 1999-00 and $106,500 in 2000-01 to continue the optical imaging project started in the Division of Banking and expand it to the Mortgage Banking Unit, the Licensed Financial Services Unit and the Division of Savings Institutions. Optical imaging electronically scans and stores documents, which allows each document to be retrieved more quickly and viewed simultaneously by multiple users. Funding includes $21,000 in 1999-00 for portable scanning stations and $15,000 in 2000-01 for network scanners. Other costs include $152,500 in 1999-00 and $91,500 in 2000-01 for training, software, monitors and other equipment.
5. CONVERSION OF PROJECT POSITION
Governor: Convert the policy initiatives advisor position from project to permanent status. There is no fiscal effect of this provision, as the position authority and permanent funding are currently in the agency's base. However, this provision would adjust the Personnel Management Information System to match the agency's base, correcting a previous error.
6. ACCESS FEES FOR COMPUTER DATABASES
Governor: Authorize the Department to charge members of the public a fee for accessing or using the Department's databases or computer systems.
DFI is modernizing its Uniform Commercial Code (UCC) lien filing system, which is a system to maintain a statewide database of all UCC filings. The UCC lien filing system contains filings of financial statements submitted by banks, credit unions, small businesses, service companies and other lending institutions. The Department anticipates increased interest on the part of such institutions in filing forms electronically. In addition, DFI expects growing interest by members of the public in accessing the Department's databases. This provision would authorize the Department to charge fees when providing such services to members of the public.
The administration did not include an estimate of the fiscal impact of this provision in the bill, as the specific fees and the costs of the services to be provided in conjunction with such fees have not been determined. However, DFI has estimated that additional program revenue from such fees could amount to $250,000 annually.
[Bill Sections: 2351 thru 2353]
7. NAME CHANGE FOR DIVISION OF SAVINGS AND LOAN
Governor: Change the name of the Division of Savings and Loan in the Department of Financial Institutions to the Division of Savings Institutions. Provide that any action taken by the Division of Savings and Loan between July 1, 1996, and the bill's general effective date under the name of the Division of Savings Institutions would have the same force and effect in all respects as if the action had been taken under the name of the Division of Savings and Loan.
[Bill Sections: 30, 222, 645, 884, 885, 2166 thru 2169, 2337 thru 2341, 2344, 2345, 2347 thru 2350, 2357 thru 2359, 2927, 3088 and 3243]
8. INSURANCE PREMIUM FINANCE COMPANY LICENSES
Governor: Provide that the Division of Banking in the Department of Financial Institutions, rather than the Commissioner of Insurance, would have the authority to revoke or suspend the license of an insurance premium finance company under the conditions specified in the statutes.
Currently, the Division of Banking is responsible for issuing licenses for insurance finance premium companies and for enforcing all state regulations relating to insurance premium finance companies, except that the Commissioner of Insurance is authorized to revoke or suspend the license of such a company. This provision would make the Division responsible for revoking or suspending the license of an insurance premium finance company, under the conditions specified in the statutes, thereby maintaining consistency in the authority of the Division with respect to regulation of such companies.
[Bill Section: 2170]
9. INTEREST RATE ON HOME MORTGAGE ESCROW ACCOUNTS
Governor: Clarify that the Division of Banking (DOB) must report information to the Division of Savings and Loan [whose name would change to the Division of Savings Institutions (DSI) under the bill] to be used in calculating the interest rate that must be paid on residential mortgage escrow accounts. Under current law, DSI calculates the interest rate for escrow accounts based on information regarding interest rates paid on passbook accounts provided by the Office of Credit Unions (OCU) and the Division of Banking. However, the current statutes do not specifically require DOB to provide this information to DSI.
[Bill Section: 2167]
10. UNIVERSAL BANKING
Governor: Authorize the Division of Banking (DOB) within the Department of Financial Institutions to certify savings banks, saving and loan associations and state banks as "universal banks" under the procedures and with the powers outlined below. Provide that a universal bank would be one of the regulated entities under the powers of supervision and control of DOB. The provisions relating to universal banks would be created in a new chapter of the statutes, and could be cited as the "Wisconsin universal bank law" (UB Law).
General Provisions
Under current law, the Division of Savings and Loan [whose name would change to the Division of Savings Institutions (DSI) under the bill] regulates savings banks and savings and loan associations. DOB regulates state banks. The powers and regulation of these financial institutions are specified in the statutes and vary by type of institution. The UB Law would allow such financial institutions organized under state statutes to apply to DOB to be certified as a universal bank. Certification as a universal bank would provide expanded powers when compared to those currently held by the individual financial institutions. Financial institutions certified as universal banks would remain subject to existing requirements, duties and liabilities and would retain their powers as savings banks, savings and loan associations or state banks, except that, in the event of a conflict between the UB Law and such requirements, duties, liabilities or powers, the UB Law would control.
The Division of Banking would be required to administer the UB Law for all universal banks and to establish such fees as it determined were appropriate for documents filed with the Division and for services provided by the Division. DOB would also be authorized to promulgate rules to carry out the UB Law and to establish additional limits or requirements on universal banks if it determined that the limits or requirements were necessary for the protection of depositors, members, investors or the public.
Certification
A state-chartered savings bank, savings and loan association or bank would be allowed to apply to become certified as a universal bank by filing a written application with DOB including such information as the Division required and on such forms and in accordance with such procedures as DOB prescribed. DOB would be required to approve or disapprove the application in writing within 60 days after its submission to the Division. However, DOB and the financial institution could mutually agree to extend the application period for an additional 60 days.
DOB would be required to approve an application for certification as a universal bank if the applying financial institution met all of the following requirements:
a. It was chartered or organized, and regulated, as a savings bank, savings and loan association or state bank under Wisconsin statutes and had been in existence and continuous operation for a minimum of three years prior to the date of the application.
b. It was "well-capitalized" or "adequately capitalized" as defined by federal law related to banks and banking.
c. It did not exhibit a combination of financial, managerial, operational and compliance weaknesses that were moderately severe or unsatisfactory, as determined by the Division based upon the Division's assessment of the financial institution's capital adequacy, asset quality, management capability, earnings quantity and quality, adequacy of liquidity and sensitivity to market risk.
d. During the 12-month period prior to the application, it had not been the subject of an enforcement action and had no enforcement action pending against it by any state or federal financial institution regulatory agency, including DOB.
For any period during which a universal bank failed to meet such requirements, the Division would be authorized to order limits or restrictions to the exercise of the powers of the universal bank under the UB Law.
DOB would be required to issue to an applicant approved for certification as a universal bank a certificate of authority stating that the financial institution was so certified.
A financial institution certified as a universal bank would be authorized to terminate its certification upon 60 days' prior written notice to the Division and written approval of the Division. As a condition to the termination, the financial institution would be required to terminate its exercise of all powers granted under the UB Law prior to the termination of the certification. Written approval of the termination by DOB would be void if the financial institution failed to satisfy this precondition to termination.
Organization
Articles of Incorporation and Bylaws. A universal bank would continue to operate under its articles of incorporation and bylaws as in effect prior to certification as a universal bank or as such articles or bylaws were subsequently amended in accordance with the provisions of the statutes under which the universal bank was organized or chartered.
Name of a Universal Bank. Under current law and with certain exceptions, an institution organized as a state savings bank is required to adopt a name that identifies it as such and that includes the term "savings." With certain exceptions, an institution organized as a mutual savings and loan association or as a capital stock savings and loan association is required to include the words "savings and loan association" or "savings association" in its name. Such an institution is required to include the word "savings" in its name if its name includes the word "bank."
Subject to certain provisions on distinguishability and use of the same name, as described below, the UB Law would allow a state savings bank, state mutual savings and loan association or state capital stock savings and loan association that had been certified as a universal bank to use the word "bank" in its name, without having to include the word "savings." In addition, subject to the same provisions on distinguishability and use of the same name, the UB Law would specify that a universal bank organized as a savings and loan association that used the word "bank" in its name in accordance with the UB Law need not include the words "savings and loan association" or "savings association" in its name.
The UB Law would require that, with certain exceptions, the name of the universal bank be distinguishable upon the records of DOB from the following: (a) the name of any other financial institution organized under the laws of this state; and (b) the name of a national bank or foreign bank authorized to transact business in this state.
However, a universal bank would be allowed to apply to the Division for authority to use a name that did not meet such requirements as to a distinguishable name. DOB could authorize the use of the name if either of the following conditions were met: (a) the other bank consented to the use in writing and submitted an undertaking, in a form satisfactory to DOB, to change its name to a name that was distinguishable upon the records of the Division from the name of the applicant; or (b) the applicant delivered to DOB a certified copy of the final judgement of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state. Such exceptions to the distinguishable name requirements are consistent with current law for state banks.
In addition, a universal bank would be able to use a name that was used in this state by another financial institution, or by an institution authorized to transact business in this state, if the universal bank had done any of the following: (a) merged with the other institution; (b) been formed by reorganization of the other institution; or (c) acquired all or substantially all of the assets, including the name, of the other institution.
Capital Requirements
Current law provides differing requirements related to capital, net worth and capital stock for the various types of financial institutions. For a savings bank, the statutes specify that such an institution may be organized to exercise the powers conferred by the relevant statutes with minimum capital, surplus and reserves for operating expenses as determined by the Division of Savings Institutions. Additional specifications are made in such areas as evidence and maintenance of capital, dividends and the nature of capital stock, capital stock loans and retirement or reduction of capital stock.
The statutes on savings and loan associations provide that such institutions must maintain net worth at an amount not less than the minimum amount established by DSI and authorizes DSI to take appropriate action if an association fails to maintain the minimum net worth required.
Under current law, DOB determines the required capital of a state bank, subject to review by the Banking Review Board. The statutes also specify that a contingent fund and paid-in surplus each in an amount equal to at least 25% of the aggregate amount of the capital stock must be subscribed at the time the subscription list of shareholders is prepared by the incorporators.
Notwithstanding such provisions, the UB Law would authorize DOB to determine the minimum capital requirements of a savings bank, savings and loan association and state bank certified as a universal bank.
