Under current statutes, the board of directors of a credit union must hire a
certified public accountant (CPA) to conduct a comprehensive annual audit of the
records, accounts, and affairs of the credit union, or the board may instead appoint
an auditing committee to annually audit the records, accounts, and cash of the credit
union and to verify member accounts. OCU may order an independent audit at the
credit union's expense if OCU finds an annual audit to be unsatisfactory. Also under
current statutes, at least once every 18 months, OCU must examine the records and
accounts of each credit union (periodic examination).
Under OCU's current rules, OCU may accept an audit report of a CPA who is
not an employee of the credit union in lieu of all or a portion of the OCU's periodic
examination. For OCU to accept an examination from the CPA of a credit union, the
CPA must satisfy certain requirements, including that the CPA submit an additional
special report on forms provided by OCU that are the regular examination forms
completed by OCU staff examiners during the course of their routine examinations.
This bill modifies OCU's rules to allow OCU to accept, in lieu of a periodic
examination, an audit report of a CPA who is an employee of the credit union. The
CPA's examination must include a determination that the credit union is operating
in accordance with generally accepted accounting principles, rather than regular
accepted credit union accounting principles as specified in OCU's current rules. The
bill also repeals the requirement that the CPA submit additional special reports on
OCU forms.
2. Reserves for member business loans with potential losses
Current OCU rules require credit unions to adopt member business loan
policies and impose various requirements and restrictions on member business
loans. A member business loan is, with certain exceptions, a loan in which the
borrower intends to use the proceeds for commercial, corporate, or agricultural
purposes or for purposes involving investment property or a business venture. With
exceptions, there is a total aggregate limit on the amount of a credit union's member
business loans as well as a per-member limit. A credit union must classify member
business loans for which there is a potential loss as substandard, doubtful, or loss,
according to the degree to which the loss is likely. For these loans classified as
substandard, doubtful, or loss, the credit union must establish a reserve of the
following minimum amounts: 10 percent of the outstanding balance of a
substandard loan, subject to variation; 50 percent of the outstanding balance of a
doubtful loan; and 100 percent of the outstanding balance of a loss loan.
This bill repeals OCU's rules requiring credit unions to classify member
business loans for which there is a potential loss as substandard, doubtful, or loss
and to establish a specified reserve amount for each of these classified member
business loans.
Record retention by financial institutions
Under current statutes, a credit union, state bank, savings and loan association
(S&L), or savings bank may have its records reproduced by a photographic or optical
imaging process that accurately and permanently reproduces the originals and then
dispose of the originals after first obtaining the written consent of, respectively, OCU
or the Division of Banking (division) in DFI. The reproduced records are thereafter
treated the same as originals.
Under this bill, after having its records accurately reproduced in this manner,
a credit union, state bank, S&L, or savings bank is not required to obtain the written
consent of OCU or the division to thereafter dispose of the originals.
Under current statutes, a state bank or an S&L may destroy or dispose of its
records that have become obsolete after first obtaining the written consent of the
division.
This bill repeals these statutory provisions relating to destruction of obsolete
records.
Under current statutes, the division must, by rule, prescribe periods of time for
which savings banks must retain records and after the expiration of which the
savings bank may destroy those records.
Under this bill, the division must by rule prescribe standards by which savings
banks must retain records and may thereafter destroy those records.
Under current rules of OCU and the division, each credit union, savings bank,
and S&L must retain its records in a manner consistent with prudent business
practices and in accordance with other provisions of state and federal law. For credit
unions, the record retention system utilized must be able to produce accurate and
verifiable records and include an index to the retained forms. Each credit union,
savings bank, and S&L must retain its records for at least the minimum period
specified in a particular publication of the Financial Managers Society, Inc. (FMS).
A credit union, savings bank, or S&L may destroy its records at the end of the
applicable minimum retention period specified in the applicable FMS publication
unless a longer retention period is required by other state or federal law. In the
destruction of records, the credit union, savings bank, or S&L must take reasonable
precautions to assure the confidentiality of information in the records.
The division's current rules for state banks include a detailed schedule setting
forth minimum record retention periods according to record type. A state bank may
destroy its records after the applicable minimum retention period has expired.
This bill modifies the rules of OCU and the division to eliminate the
requirement that credit union, savings bank, and S&L records must be retained for
at least the minimum period specified in the applicable FMS publication.
The bill also eliminates the division's rule establishing a schedule of required
minimum retention periods, according to record type, for state banks. The bill
specifies that, subject to the requirement that records be retained in a manner
consistent with prudent business practices and in accordance with other provisions
of state and federal law, a credit union, state bank, S&L, or savings bank may destroy
its records. In the destruction of records, the credit union, state bank, S&L, or
savings bank must take reasonable precautions to assure the confidentiality of
information in the records. For state banks, S&Ls, and savings banks the bill
specifies that the record retention system must be able to accurately produce records,
and for credit unions the bill eliminates the requirement that the record retention
system include an index to retained forms.
Technical corrections
The bill makes other minor, clarifying, technical, or nonsubstantive changes to
OCU's rules.
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:
SB520,1
1Section
1. 13.92 (4) (bm) of the statutes is created to read:
SB520,7,112
13.92
(4) (bm) If 2 or more rules filed under s. 227.20 or modified under s.
3227.265 affect the same unit of the Wisconsin administrative code without taking
4cognizance of the effect thereon of the other rules and if the legislative reference
5bureau finds that there is no mutual inconsistency in the changes made by each such
6rule, the legislative reference bureau shall incorporate the changes made by each
7rule into the text of the unit and document the incorporation in a note to the unit.
8For each such incorporation, the legislative reference bureau shall include in a
9correction bill a provision formally validating the incorporation. Section 227.27 (2)
10is not affected by printing decisions made by the legislative reference bureau under
11this paragraph.
SB520,2
12Section
2. 13.92 (4) (c) of the statutes is amended to read:
SB520,7,1413
13.92
(4) (c) The legislative reference bureau may insert in the Wisconsin
14administrative code a note explaining any change made under par. (b)
or (bm).
SB520,3
15Section
3. 13.92 (4) (d) of the statutes is amended to read:
SB520,8,2
113.92
(4) (d) Sections 227.114, 227.116, 227.135
, and 227.14 to 227.24 do not
2apply to any change made by the legislative reference bureau under par. (b)
or (bm).
SB520,4
3Section
4. 13.92 (4) (e) of the statutes is amended to read:
SB520,8,54
13.92
(4) (e) The legislative reference bureau shall prepare and keep on file a
5record of each change made under par. (b)
or (bm).
SB520,5
6Section
5. 13.92 (4) (f) of the statutes is amended to read:
SB520,8,87
13.92
(4) (f) The legislative reference bureau shall notify the agency involved
8of each change made under par. (b)
or (bm).
SB520,8,1311
35.93
(2) (b) 4. Copies of all rules filed with the legislative reference bureau
12under s. 227.20 (1)
or modified under s. 227.265 since the compilation of the
13preceding register, including emergency rules filed under s. 227.24 (3).
SB520,8,1816
35.93
(2) (c) 1. Each chapter of the Wisconsin administrative code that has been
17affected by rules filed with legislative reference bureau under s. 227.20 (1)
or
18modified under s. 227.265, in accordance with sub. (3) (e) 1.
SB520,8
19Section
8. 35.93 (3) of the statutes is amended to read:
SB520,9,820
35.93
(3) The legislative reference bureau shall compile and deliver to the
21department for printing copy for a register which shall contain all the rules filed
22under s. 227.20 or modified under s. 227.265 since the compilation of rules for the
23preceding issue of the register was made and those executive orders which are to be
24in effect for more than 90 days or an informative summary thereof. The complete
25register shall be compiled and published before the first day of each month and a
1notice section of the register shall be compiled and published before the 15th day of
2each month. Each issue of the register shall contain a title page with the name
3"Wisconsin administrative register", the number and date of the register, and a table
4of contents. Each page of the register shall also contain the date and number of the
5register of which it is a part in addition to the other necessary code titles and page
6numbers. The legislative reference bureau may include in the register such
7instructions or information as in the bureau's judgment will help the user to correctly
8make insertions and deletions in the code and to keep the code current.
SB520,9,1511
35.93
(3) (e) (intro.) The legislative reference bureau shall incorporate into the
12appropriate chapters of the Wisconsin administrative code each permanent rule filed
13with the legislative reference bureau under s. 227.20 (1)
or modified under s. 227.265 14and, for each chapter of the administrative code affected by a rule, do all of the
15following:
SB520,9,2318
35.93
(3) (e) 1. Publish the chapter in the appropriate end-of-month register
19in accordance with the filing deadline for publication established in the rules
20procedures manual published under s. 227.15 (7)
or, in an end-of-month register
21agreed to by the submitting agency and the legislative reference bureau
, or, in the
22case of a rule modified under s. 227.265, in the end-of-month register for the month
23in which the bill modifying the rule is enacted.
SB520,11
24Section
11. 186.098 (9m) of the statutes is amended to read:
SB520,10,3
1186.098
(9m) Participation loans. Subject to rules prescribed by the office of
2credit unions, a A credit union may participate with other lenders in a loan of any
3type that the credit union may otherwise make.
SB520,12
4Section
12. 186.113 (7) of the statutes is amended to read:
SB520,10,85
186.113
(7) Conditional sales contracts Acquiring interests in credit sales
6transactions. Purchase or acquire
conditional sales contracts or similar
7instruments executed by interests in credit sales transactions involving credit union
8members.
SB520,13
9Section
13. 186.118 of the statutes is created to read:
SB520,10,14
10186.118 Incidental powers parity with federal credit unions. (1) In
11addition to any activity or power authorized under ss. 186.098, 186.11, 186.113,
12186.115, and 186.235 (21), a credit union organized under s. 186.02 may engage in
13any activity or exercise any power that is listed by the office of credit unions under
14sub. (2) or (3) (b).
SB520,10,18
15(2) The office of credit unions shall publish on the department of financial
16institutions' Internet site a list of activities and powers incidental to the business of
17a credit union that are authorized for federally chartered credit unions as of the
18effective date of this subsection .... [LRB inserts date].
SB520,11,2
19(3) (a) After the effective date of this paragraph .... [LRB inserts date], if any
20activity or power incidental to the business of a credit union that is not listed under
21sub. (2) becomes authorized for federally chartered credit unions, within 30 days
22after the activity or power becomes authorized the office of credit unions shall make
23a determination as to whether the activity or power should also be authorized for
24credit unions organized under s. 186.02. In making this determination, the office of
1credit unions shall consider the degree to which the following apply with respect to
2the activity or power:
SB520,11,43
1. It is necessary, convenient, or useful for effectively carrying out the mission
4or business of a credit union.
SB520,11,65
2. It is the functional equivalent or logical outgrowth of activities or powers that
6are part of the mission or business of a credit union.
SB520,11,97
3. It involves risks similar in nature to those already assumed as part of the
8business of the credit union and it is not likely to be detrimental to the overall safety
9and soundness of the credit union.
SB520,11,1310
(b) If the office of credit unions determines under par. (a) that the activity or
11power authorized for federally chartered credit unions should also be authorized for
12credit unions organized under s. 186.02, the office of credit unions shall add the
13activity or power to the list under sub. (2).
SB520,14
14Section
14. 186.71 (1) of the statutes is amended to read:
SB520,11,2115
186.71
(1) Any credit union may cause any or all records kept by such credit
16union to be recorded, copied or reproduced by any photostatic, photographic or
17miniature photographic process or by optical imaging if the process employed
18correctly, accurately and permanently copies, reproduces or forms a medium for
19copying, reproducing or recording the original record on a film or other durable
20material. A credit union may thereafter dispose of the original record
after first
21obtaining the written consent of the office of credit unions.
SB520,15
22Section
15. 214.75 (4) of the statutes is amended to read:
SB520,12,523
214.75
(4) The division shall by rule prescribe
periods of time for standards by 24which savings banks must retain records and
after the expiration of which, the
25savings bank may destroy those records. Liability may not accrue against the
1savings bank, the division or this state for destruction of records according to rules
2of the division promulgated under this subsection. In an action in which records of
3the savings bank may be called in question or demanded, a showing of
the expiration
4of the retention period compliance with the division's standards shall be sufficient
5to excuse
for failure any inability to produce the records.
SB520,16
6Section
16. 214.75 (5) (a) of the statutes is amended to read:
SB520,12,157
214.75
(5) (a) A savings bank may cause records kept by the savings bank to
8be recorded, copied or reproduced by any photostatic, photographic or miniature
9photographic process or by optical imaging if the process employed correctly,
10accurately and permanently copies, reproduces or forms a medium for copying,
11reproducing or recording the original record on a film or other durable material. A
12savings bank may thereafter dispose of the original record
after obtaining the
13written consent of the division. This subsection
, except that part requiring written
14consent of the division, is applicable to federal savings banks if it does not contravene
15federal law.
SB520,17
16Section
17. 215.26 (3) of the statutes is repealed.
SB520,18
17Section
18. 215.26 (4) (a) of the statutes is amended to read:
SB520,13,218
215.26
(4) (a) Any association may cause any or all records kept by such
19association to be recorded, copied or reproduced by any photostatic, photographic or
20miniature photographic process or by optical imaging if the process employed
21correctly, accurately and permanently copies, reproduces or forms a medium for
22copying, reproducing or recording the original record on a film or other durable
23material. An association may thereafter dispose of the original record
after first
24obtaining the written consent of the division. This section
, excepting the part of it
1which requires written consent of the division, is applicable to federal associations
2insofar as it does not contravene federal law.
SB520,19
3Section
19. 220.28 of the statutes is repealed.
SB520,20
4Section
20. 220.285 (1) of the statutes is amended to read:
SB520,13,165
220.285
(1) Any state bank, trust company bank, licensee under ss. 138.09,
6138.12, 138.14, 218.0101 to 218.0163, 218.02, 218.04, 218.05, 224.72, or 224.725 or
7ch. 217 may cause any or all records kept by such bank, licensee, or registered person
8to be recorded, copied or reproduced by any photostatic, photographic or miniature
9photographic process or by optical imaging if the process employed correctly,
10accurately and permanently copies, reproduces or forms a medium for copying,
11reproducing or recording the original record on a film or other durable material. A
12bank
, may thereafter dispose of the original record. A licensee
, or registered person
13may thereafter dispose of the original record after first obtaining the written consent
14of the division. This section
, excepting that part of it which requires written consent
15of the division, is applicable to national banking associations insofar as it does not
16contravene federal law.
SB520,21
17Section
21. 227.01 (13) (intro.) of the statutes is amended to read:
SB520,13,2418
227.01
(13) (intro.) "Rule" means a regulation, standard, statement of policy
, 19or general order of general application which has the effect of law and which is issued
20by an agency to implement, interpret
, or make specific legislation enforced or
21administered by the agency or to govern the organization or procedure of the agency.
22"Rule" includes a modification of a rule under s. 227.265. "Rule" does not include, and
23s. 227.10 does not apply to, any action or inaction of an agency, whether it would
24otherwise meet the definition under this subsection, which:
SB520,22
25Section
22. 227.01 (13) (yv) of the statutes is created to read:
SB520,14,1
1227.01
(13) (yv) Relates to any determination or list under s. 186.118.
SB520,23
2Section
23. 227.11 (2) (intro.) of the statutes is amended to read:
SB520,14,43
227.11
(2) (intro.) Rule-making authority is expressly conferred
on an agency 4as follows:
SB520,24
5Section
24. 227.265 of the statutes is created to read:
SB520,14,10
6227.265 Repeal or modification of rules. If a bill to repeal or modify a rule
7is enacted, the procedures under ss. 227.114 to 227.21 and 227.26 do not apply.
8Instead, the legislative reference bureau shall publish the repeal or modification in
9the Wisconsin administrative code and register as required under s. 35.93, and the
10repeal or modification shall take effect as provided in s. 227.22.
SB520,25
11Section
25. 227.27 (2) of the statutes is amended to read:
SB520,14,1712
227.27
(2) The code shall be prima facie evidence in all courts and proceedings
13as provided by s. 889.01, but this does not preclude reference to or, in case of a
14discrepancy, control over a rule filed with the legislative reference bureau
or the
15secretary of state under s. 227.20 or modified under s. 227.265, and the certified copy
16of a rule shall also and in the same degree be prima facie evidence in all courts and
17proceedings.
SB520,26
18Section
26. DFI-Bkg 9.01 of the administrative code is repealed and recreated
19to read:
SB520,14,2420
DFI-Bkg 9.01
Retention of records; destruction of records. (1) Each
21bank shall retain its records in a manner consistent with prudent business practices
22and in accordance with this chapter and other applicable state or federal laws, rules,
23and regulations. The record retention system utilized must be able to accurately
24produce such records.
SB520,15,4
1(2) Except where a retention period is required by state or federal laws, rules,
2or regulations, a bank may destroy its records subject to the considerations set forth
3in sub. (1). In the destruction of records, the bank shall take reasonable precautions
4to assure the confidentiality of information in the records.
SB520,27
5Section
27. DFI-Bkg 41.01 (intro.) of the administrative code is amended to
6read:
SB520,15,97
DFI-Bkg 41.01
License fee. (intro.)
Except as provided in s. DFI-Bkg 47.04,
8the The following nonrefundable fees shall be submitted with an application for a
9license or renewal of a license under subch. III of ch. 224, Stats.:
SB520,28
10Section
28. Chapter DFI-Bkg 47 of the administrative code is repealed.
SB520,29
11Section
29. DFI-CU 54.05 (2) (b) 3. of the administrative code is amended to
12read:
SB520,15,1413
DFI-CU 54.05
(2) (b) 3. A
final title letter report
showing the status of the
14current lien.
SB520,30
15Section
30. DFI-CU 57.01 of the administrative code is amended to read:
SB520,15,2416
DFI-CU 57.01
Retention of records. Each credit union shall retain its
17records in a manner consistent with prudent business practices and in accordance
18with this chapter and other
applicable state or federal laws, rules, and regulations.
19The record retention system utilized must be able to
accurately produce
accurate and
20verifiable records and include an index to the retained forms. Each credit union shall
21retain its records for at least the minimum period specified in the January 1996
22edition of the technical publication of the Financial Managers Society, Inc. of
23Chicago, Illinois, titled "Financial Institutions Record Retention Manual." such
24records.
SB520,31
25Section
31. DFI-CU 57.01 (note) of the administrative code is repealed.
SB520,32
1Section
32. DFI-CU 57.03 of the administrative code is amended to read: