SB121: Bill Text

In addition to these necessary or convenient powers, the bill allows a universal bank to engage in activities that are reasonably related or incident to the purposes of the universal bank. With certain exceptions, a universal bank may engage in these activities either directly or indirectly through a subsidiary. Under the bill, any activity permitted under the federal Bank Holding Act satisfies the reasonably related or incidental criterion. The bill also contains a list of specific activities that meet the reasonably related or incidental criterion. The listed activities include: 1) business and professional services; 2) data processing; 3) courier and messenger services; 4) credit-related activities; 5) consumer services; 6) real estate-related services; 7) insurance services, other than insurance underwriting; 8) securities brokerage; 9) investment advice; 10) securities and bond underwriting; 11) mutual fund activities; 12) financial consulting; 13) tax planning and preparation; 14) community development and charitable activities; and 15) debt cancellation contracts.

A universal bank may also engage in activities that the division of banking determines by rule are reasonably related or incidental to these listed activities. In addition, the division of banking, by rule, may determine that other activities are reasonably related or incidental activities. In promulgating these rules, the division of banking need not follow the standard notice, hearing, and publication requirements that generally apply to administrative rule making.

A universal bank must give 60 days' prior written notice to the division of banking of the universal bank's intention to exercise a necessary or convenient power or to engage in a reasonably related or incidental activity. The division of banking may deny a universal bank the authority to exercise a necessary or convenient power or to engage in a reasonably related or incidental activity, other than an activity that is contained in the specific list of reasonably related or incidental activities, if the division of banking determines that the activity is not a reasonably related or incidental activity, that the financial institution is not well-capitalized, that the financial institution is the subject of an enforcement action, or that the financial institution does not have sufficient management expertise for the activity. The division of banking may also require a universal bank to engage in certain of these activities through a subsidiary, with appropriate safeguards to limit the risk exposure of the universal bank. Amounts invested in a single subsidiary that engages in these activities may not exceed 20% of the universal bank's capital, unless a higher percentage is approved by the division of banking.

Universal banks and financial privacy

This bill requires every universal bank to comply with certain federal laws relating to customer financial privacy and requires the division of banking to examine every universal bank for compliance with these federal laws. The bill requires the division of banking to decertify any universal bank that fails to substantially comply with these federal laws.

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:

SB121, s. 1 Section 1. 93.01 (1m) of the statutes is amended to read:

SB121,10,9 93.01 (1m) "Business" includes any business, except that of banks, savings banks, credit unions, savings and loan associations , and insurance companies. "Business" includes public utilities and telecommunications carriers to the extent that their activities, beyond registration, notice, and reporting activities, are not regulated by the public service commission and includes public utility and telecommunications carrier methods of competition or trade and advertising practices that are exempt from regulation by the public service commission under s. 196.195, 196.196, 196.202, 196.203, 196.219, or 196.499 or by other action of the commission.

SB121, s. 2 Section 2. 186.01 (2) of the statutes is amended to read:

SB121,10,15 186.01 (2) "Credit union" means, except as specifically provided under ss. 186.41 (1) and 186.45 (1), a cooperative, nonprofit corporation, incorporated under this chapter to encourage thrift among its members, create a source of credit at a fair and reasonable cost, and provide an opportunity for its members to improve their economic and social conditions.

SB121, s. 3 Section 3. 186.02 (2) (a) 1. of the statutes is amended to read:

SB121,10,18 186.02 (2) (a) 1. The conditions of residence or occupation which qualify persons that determine eligibility for membership.

SB121, s. 4 Section 4. 186.02 (2) (b) 2. of the statutes is amended to read:

SB121,11,2 186.02 (2) (b) 2. Residents Except as otherwise provided in this subdivision, individuals who reside or are employed within a well-defined neighborhood, community or rural district and contiguous neighborhoods and communities. If the office of credit unions, subsequent to a credit union merger, determines that it would be inappropriate under the circumstances to require members of the credit union that results from the merger to reside or be employed in contiguous neighborhoods and communities, the requirement that these neighborhoods and communities be contiguous does not apply.

SB121, s. 5 Section 5. 186.02 (2) (b) 2m. of the statutes is created to read:

SB121,11,5 186.02 (2) (b) 2m. Individuals who reside or are employed within well-defined and contiguous rural districts or multicounty regions.

SB121, s. 6 Section 6. 186.02 (2) (c) of the statutes is amended to read:

SB121,11,11 186.02 (2) (c) Members of the immediate family of all qualified persons are eligible for membership. In this paragraph, "members of the immediate family" include the wife, husband, parents, stepchildren and children of a member whether living together in the same household or not and any other relatives of the member or spouse of a member living together in the same household as the member.

SB121, s. 7 Section 7. 186.02 (2) (d) of the statutes is renumbered 186.02 (2) (d) 1. and amended to read:

SB121,11,17 186.02 (2) (d) 1. Organizations and associations An organization or association of individuals, the majority of whom the directors, owners, or members of which are eligible for membership, may be admitted to membership in the same manner and under the same conditions as individuals.

SB121, s. 8 Section 8. 186.02 (2) (d) 2. of the statutes is created to read:

SB121,11,21 186.02 (2) (d) 2. An organization or association that has its principal business location within any geographic limits of the credit union's field of membership may be admitted to membership.

SB121, s. 9 Section 9. 186.11 (4) (title) of the statutes is amended to read:

SB121,11,24 186.11 (4) (title) Investment in credit union service corporations organizations.

SB121, s. 10 Section 10. 186.11 (4) (a) of the statutes is renumbered 186.11 (4) (a) (intro.) and amended to read:

SB121,12,6 186.11 (4) (a) (intro.) A Unless the office of credit unions approves a higher percentage, a credit union may invest not more than 1.5% of its total assets in the capital shares or obligations of a credit union service corporation organizations that satisfy all of the following:

SB121,12,8 2. Are organized primarily to provide goods and services to credit unions, credit union organizations, and credit union members.

SB121, s. 11 Section 11. 186.11 (4) (a) 1. of the statutes is created to read:

SB121,12,12 186.11 (4) (a) 1. Are corporations, limited partnerships, limited liability companies, or other entities that are permitted under the laws of this state and that are approved by the office of credit unions.

SB121, s. 12 Section 12. 186.11 (4) (b) (intro.) and 1. of the statutes are amended to read:

SB121,12,15 186.11 (4) (b) (intro.) A credit union service corporation organization under par. (a) may provide goods and services including any of the following:

SB121,12,21 1. Credit union operations services, including service centers, credit and debit card services, automated teller and remote terminal services, electronic transaction services, accounting systems, data processing, management training and support, payment item processing, record retention and storage, locator services, research, debt collection, credit analysis and loan servicing, coin and currency services, and marketing and advertising services.

SB121, s. 13 Section 13. 186.11 (4) (c) of the statutes is amended to read:

SB121,12,24 186.11 (4) (c) A credit union service corporation organization may be subject to audit by the office of credit unions.

SB121, s. 14 Section 14. 186.113 (1) of the statutes is amended to read:

SB121,13,6 186.113 (1) Branch offices. If the need and necessity exist and with With the approval of the office of credit unions, establish branch offices inside this state or no more than 25 miles or outside of this state. Permanent records may be maintained at branch offices established under this subsection. In this subsection, the term "branch office" does not include a remote terminal, a limited services office, or a service center.

SB121, s. 15 Section 15. 186.113 (1m) (a) (intro.) of the statutes is amended to read:

SB121,13,10 186.113 (1m) (a) (intro.) Establish Before the effective date of this paragraph .... [revisor inserts date], establish limited services offices outside this state to serve any member of the credit union if all of the following requirements are met:

SB121, s. 16 Section 16. 186.113 (6) (b) and (c) of the statutes are amended to read:

SB121,13,14 186.113 (6) (b) Act as trustees or custodians of member tax deferred retirement funds, individual retirement accounts, medical savings accounts, or other employee benefit accounts or funds permitted by federal law to be deposited in a credit union.

SB121,13,16 (c) Act as a depository for member-deferred member qualified and nonqualified deferred compensation funds as permitted by federal law.

SB121, s. 17 Section 17. 186.113 (24) of the statutes is created to read:

SB121,13,19 186.113 (24) Funeral trusts. Accept deposits made by members for the purpose of funding burial agreements by trusts created pursuant to s. 445.125.

SB121, s. 18 Section 18. 186.20 of the statutes is created to read:

SB121,13,23 186.20 Financial privacy. A credit union shall comply with any applicable requirements under 15 USC 6801 to 6803 and any applicable regulations prescribed by the national board under 15 USC 6804.

SB121, s. 19 Section 19. 186.235 (7) (a) (intro.) of the statutes is amended to read:

SB121,14,6 186.235 (7) (a) (intro.) Employees of the office of credit unions and members of the review board shall keep secret all the facts and information obtained in the course of examinations, except or contained in any report provided by a credit union other than any semiannual or quarterly financial report that is regularly filed with the office of credit unions. This requirement does not apply in any of the following situations:

SB121, s. 20 Section 20. 186.235 (7) (c) of the statutes is created to read:

SB121,14,13 186.235 (7) (c) If any person mentioned in par. (a) discloses any information about the private account or transactions of a credit union or any information obtained in the course of an examination of a credit union, except as provided in pars. (a) and (b), that person may be required to forfeit his or her office or position and may be fined not less than $100 nor more than $1,000, or imprisoned for not less than 6 months nor more than 3 years, or both.

SB121, s. 21 Section 21. 186.235 (7m) of the statutes is created to read:

SB121,14,17 186.235 (7m) Return of examination reports. Examination reports possessed by a credit union are confidential, remain the property of the office of credit unions, and shall be returned to the office of credit unions immediately upon request.

SB121, s. 22 Section 22. 186.235 (16) (a) of the statutes is renumbered 186.235 (16).

SB121, s. 23 Section 23. 186.235 (16) (b) of the statutes is repealed.

SB121, s. 24 Section 24. 186.235 (16) (bm) of the statutes is created to read:

SB121,15,3 186.235 (16) (bm) Except as otherwise provided in this paragraph, the examination of a credit union under par. (a) shall include an examination of the credit union's compliance with s. 186.20. The examination under par. (a) need not include an examination of the credit union's compliance with s. 186.20 if, during the 12 months preceding the date of the examination under par. (a), the credit union received from the national board a consumer compliance examination that contains information regarding the credit union's compliance with 15 USC 6801 to 6803 and any applicable regulations prescribed under 15 USC 6804.

SB121, s. 25 Section 25. 186.36 of the statutes is amended to read:

SB121,15,8 186.36 Sale of insurance in credit unions. Any officer or employee of a credit union, when acting as an agent for the sale of insurance on behalf of the credit union, shall pay all commissions received from the sale of credit life insurance or credit accident and sickness insurance to the credit union.

SB121, s. 26 Section 26. 186.41 (title) of the statutes is amended to read:

SB121,15,11 186.41 (title) Interstate acquisition acquisitions and merger mergers of credit unions.

SB121, s. 27 Section 27. 186.41 (1) (a) of the statutes is renumbered 186.41 (1) (bm) and amended to read:

SB121,15,15 186.41 (1) (bm) "In-state Wisconsin credit union" means a credit union having its principal office located in this state.

SB121, s. 28 Section 28. 186.41 (1) (c) of the statutes is renumbered 186.41 (1) (am) and amended to read:

SB121,15,20 186.41 (1) (am) "Regional Out-of-state credit union" means a state or federal credit union that has its, the principal office of which is located in one of the regional states a state other than this state.

SB121, s. 29 Section 29. 186.41 (1) (d) of the statutes is repealed.

SB121, s. 30 Section 30. 186.41 (2) and (3) of the statutes are amended to read:

SB121,15,24 186.41 (2) In-state Wisconsin credit union. (a) An in-state A Wisconsin credit union may do any of the following:

SB121,16,2 1. Acquire an interest in, or some or all of the assets and liabilities of, one or more regional out-of-state credit unions.

SB121,16,3 2. Merge with one or more regional out-of-state credit unions.

SB121,16,7 (b) An in-state A Wisconsin credit union proposing any action under par. (a) shall provide the office of credit unions a copy of any original application seeking approval by a federal agency or by an agency of the regional another state and of any supplemental material or amendments filed in connection with any application.

SB121,16,9 (3) Regional Out-of-state credit unions. Except as provided in sub. (4), a regional an out-of-state credit union may do any of the following:

SB121,16,11 (a) Acquire an interest in, or some or all of the assets of, one or more in-state Wisconsin credit unions.

SB121,16,12 (b) Merge with one or more in-state Wisconsin credit unions.

SB121, s. 31 Section 31. 186.41 (4) (intro.), (a) to (d) and (f) of the statutes are amended to read:

SB121,16,16 186.41 (4) Limitations. (intro.) A regional An out-of-state credit union may not take any action under sub. (3) until all of the following conditions have been met:

SB121,16,20 (a) The office of credit unions finds that the statutes of the regional state in which the regional out-of-state credit union has its principal office permit in-state Wisconsin credit unions to both acquire regional out-of-state credit union assets and merge with one or more regional out-of-state credit unions in the regional that state.

SB121,16,23 (b) The office of credit unions has not disapproved the acquisition of in-state Wisconsin credit union assets or the merger with the in-state Wisconsin credit union under sub. (5).

SB121,17,7 (c) The office of credit unions gives a class 3 notice, under ch. 985, in the official state newspaper, of the application to take an action under sub. (3) and of the opportunity for a hearing and, if at least 25 residents of this state petition for a hearing within 30 days of the final notice or if the office of credit unions on its own motion calls for a hearing within 30 days of the final notice, the office of credit unions holds a public hearing on the application, except that a hearing is not required if the office of credit unions finds that an emergency exists and that the proposed action under sub. (3) is necessary and appropriate to prevent the probable failure of an in-state a Wisconsin credit union that is closed or in danger of closing.

SB121,17,11 (d) The office of credit unions is provided a copy of any original application seeking approval by a federal agency of the acquisition of in-state Wisconsin credit union assets or of the merger with an in-state a Wisconsin credit union and of any supplemental material or amendments filed with the application.

SB121,17,14 (f) With regard to an acquisition of assets of an in-state a Wisconsin credit union that is chartered on or after May 9, 1986, the in-state Wisconsin credit union has been in existence for at least 5 years before the date of acquisition.

SB121, s. 32 Section 32. 186.41 (5) (a), (b), (c) and (cr) of the statutes are amended to read:

SB121,17,19 186.41 (5) (a) Considering the financial and managerial resources and future prospects of the applicant and of the in-state Wisconsin credit union concerned, the action would be contrary to the best interests of the members of the in-state Wisconsin credit union.

SB121,17,22 (b) The action would be detrimental to the safety and soundness of the applicant or of the in-state Wisconsin credit union concerned, or to a subsidiary or affiliate of the applicant or of the in-state Wisconsin credit union.

SB121,18,2 (c) Because the applicant, its executive officers, or directors have not established a record of sound performance, efficient management, financial responsibility, and integrity, the action would be contrary to the best interests of the creditors, the members or, the other customers of the applicant or of the in-state , the Wisconsin credit union, or contrary to the best interests of the public.

SB121,18,6 (cr) The applicant has failed to propose to provide adequate and appropriate services of the type contemplated by the community reinvestment act of 1977 in the community in which the in-state Wisconsin credit union which the applicant proposes to acquire or merge with is located.

SB121, s. 33 Section 33. 186.41 (6) (a) of the statutes is renumbered 186.41 (6).

SB121, s. 34 Section 34. 186.41 (6) (b) of the statutes is repealed.

SB121, s. 35 Section 35. 186.41 (8) of the statutes is repealed.