LRB-4506/1
ARG:cjs&kjf
2015 - 2016 LEGISLATURE
January 25, 2016 - Introduced by Representatives Craig, Kuglitsch, Brandtjen,
E. Brooks, Brostoff, Czaja, Hintz, Jacque, Kremer, Krug, Loudenbeck,
Murphy, Nygren, Petryk, Riemer, Ripp, Rohrkaste, Sargent, Sinicki,
Skowronski, Tauchen, Zepnick and Danou, cosponsored by Senators
Stroebel, Gudex, Bewley, Carpenter and Vinehout. Referred to Committee
on Financial Institutions.
AB807,1,6
1An Act to repeal 186.11 (2) (b) and 186.22;
to renumber and amend 186.11
2(2) (a), 186.235 (16) and 186.70;
to amend 186.071 (1) (e), 186.113 (8), 186.12
3(3), 186.13, 186.235 (7m) and 186.70 (title);
to repeal and recreate 186.17;
4and
to create 186.01 (4), 186.07 (8), 186.235 (7) (b) 3., 186.235 (16) (b) and
5186.70 (2) of the statutes;
relating to: credit union operations and modifying
6rules promulgated by the Department of Financial Institutions.
Analysis by the Legislative Reference Bureau
This bill makes various statutory and administrative rule changes related to
the operations of credit unions. Among the statutory changes, the bill does all of the
following:
1. Specifies that a credit union must maintain sufficient reserves to meet
anticipated withdrawals, commitments, and loan demand and must maintain at
least the level of reserves required by the National Credit Union Administration
(NCUA).
2. Creates an exception to the requirement that the Office of Credit Unions in
the Department of Financial Institutions conduct an examination of the records and
accounts of each credit union at least once every 18 months, allowing, in lieu of this
examination, the OCU to accept an examination conducted by the NCUA.
3. Removes a limit under current law on the amount that a credit union may
make in donations and grants approved by the credit union's board of directors.
4. Creates provisions relating to director conflict of interest transactions,
defined as a transaction with the credit union in which a director of the credit union
has a direct or indirect interest. The bill specifies that a conflict of interest
transaction is not voidable by the credit union solely because of the director's interest
in the transaction if the transaction was fair to the credit union or if the material facts
were disclosed or known and the transaction was authorized, approved, or ratified
in the manner specified in the bill.
5. Provides a procedure under which a group of credit union members have a
right to inspect and copy nonconfidential portions of the credit union's accounting
books and records and the minutes of credit union proceedings.
6. Authorizes credit unions and the OCU to provide confidential examination
reports to the credit union's attorneys, independent certified public accountants, or
other consultants or advisers who have agreed in writing to maintain the
confidentiality of the report.
7. Revises the contents of the oath of office that credit union directors, officers,
committee members, and employees must take with respect to personal pecuniary
interests and conflicts of interest.
8. Provides that a member expelled from a credit union may petition the board
of directors in writing for reconsideration of the member's expulsion, but no longer
has a right to a hearing.
9. Repeals a statutory provision authorizing ten or more credit unions, with the
OCU's approval, to form the Credit Union Finance Corporation.
10. Repeals a statutory provision imposing a limit on the value of a building
used for credit union operations.
The bill also makes the following changes to DFI's administrative rules:
1. The bill allows a credit union to provide written notice, instead of obtaining
express or implied prior approval, before placing and operating an automated teller
machine at a location away from a credit union office.
2. The bill removes loan officers from the prohibition against preferential
treatment for loan transactions involving directors, executive officers, and credit
committee members.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB807,1
1Section
1. 186.01 (4) of the statutes is created to read:
AB807,2,42
186.01
(4) "Net worth" means the aggregate of retained earnings of a credit
3union, as determined according to generally accepted accounting principles, and
4other forms of capital approved by the director of the office of credit unions.
AB807,2
5Section
2. 186.07 (8) of the statutes is created to read:
AB807,3,3
1186.07
(8) Director conflict of interest. (a) In this subsection, "conflict of
2interest transaction" means a transaction with the credit union in which a director
3of the credit union has a direct or indirect interest.
AB807,3,54
(b) A conflict of interest transaction is not voidable by the credit union solely
5because of the director's interest in the transaction if any of the following is true:
AB807,3,96
1. The material facts of the transaction and the director's interest were
7disclosed or known to the board of directors or a committee of the board of directors
8and the board of directors or committee authorized, approved, or specifically ratified
9the transaction under par. (d).
AB807,3,1010
2. The transaction was fair to the credit union.
AB807,3,1311
(c) For purposes of this subsection, the circumstances in which a director of the
12credit union has an indirect interest in a transaction include a transaction under any
13of the following circumstances:
AB807,3,1514
1. Another entity in which the director has a material financial interest or in
15which the director is a general partner is a party to the transaction.
AB807,3,1816
2. Another entity of which the director is a director, officer, or trustee is a party
17to the transaction and the transaction is or, because of its significance to the credit
18union, should be considered by the board of directors of the credit union.
AB807,4,319
(d) For purposes of par. (b) 1., a conflict of interest transaction is authorized,
20approved, or specifically ratified if it receives the affirmative vote of a majority of the
21directors on the board of directors or on the committee acting on the transaction who
22have no direct or indirect interest in the transaction. If a majority of the directors
23who have no direct or indirect interest in the transaction vote to authorize, approve,
24or ratify the transaction, a quorum is present for the purpose of taking action under
25this subsection. The presence of, or a vote cast by, a director with a direct or indirect
1interest in the transaction does not affect the validity of any action taken under par.
2(b) 1. if the transaction is otherwise authorized, approved, or ratified as provided in
3this subsection.
AB807,3
4Section
3. 186.071 (1) (e) of the statutes is amended to read:
AB807,4,65
186.071
(1) (e) Avoid initiating or participating in any action that may
be in
6that person's present to that person a personal
pecuniary conflict of interest.
AB807,4
7Section
4. 186.11 (2) (a) of the statutes is renumbered 186.11 (2) and amended
8to read:
AB807,4,119
186.11
(2) Credit union property. Subject to par. (b), a A credit union may
10purchase, hold
, and dispose of property as necessary for or incidental to its
11operations.
AB807,5
12Section
5. 186.11 (2) (b) of the statutes is repealed.
AB807,6
13Section
6. 186.113 (8) of the statutes is amended to read:
AB807,4,1814
186.113
(8) Donations. Make donations and grants
, the total of which may not
15exceed 1.0 percent of regular reserves within a given year, if the board of directors
16approves any such donation or grant and the approval is based on a determination
17that the donation or grant is in the best interest of the credit union and is reasonable
18given the size and financial condition of the credit union.
AB807,7
19Section
7. 186.12 (3) of the statutes is amended to read:
AB807,4,2420
186.12
(3) Expenditures. The To the extent permitted by a credit union's
21bylaws, the officers elected by the board of directors
, and the members of the credit
22committee
and loan officers may receive such compensation as the board authorizes,
23but the expenditures of the credit union for all purposes shall be paid from its
24earnings.
AB807,8
25Section
8. 186.13 of the statutes is amended to read:
AB807,5,10
1186.13 Expulsion. If the board of directors adopts a written policy, a credit
2union may expel a member if the member neglects or refuses to comply with this
3chapter or the credit union bylaws or if the board has other just cause. The credit
4union shall provide notice to the member in writing of the reason for expulsion. The
5notice shall include a description of the member's right to
a hearing petition the
6board for reconsideration of the member's expulsion and the time period for the
7member to
request a hearing petition. If a member
requests a hearing petitions the
8board in writing within 45 days of receipt of the expulsion notice, the board shall
give
9the member an opportunity to be heard on reconsider the expulsion within 90 days
10after the date of the expulsion notice.
AB807,9
11Section
9. 186.17 of the statutes is repealed and recreated to read:
AB807,5,17
12186.17 Reserves. A credit union shall maintain sufficient reserves to meet
13anticipated withdrawals, commitments, and loan demand. A credit union shall
14maintain at least the level of reserves required for it by the national credit union
15administration. The office of credit unions may prescribe additional reserve
16requirements for an individual credit union based on examination findings or other
17reports available to the office.
AB807,10
18Section
10. 186.22 of the statutes is repealed.
AB807,11
19Section
11. 186.235 (7) (b) 3. of the statutes is created to read:
AB807,5,2220
186.235
(7) (b) 3. Provide examination reports to a credit union's attorneys,
21independent certified public accountants, or other consultants or advisers who have
22agreed in writing to maintain the confidentiality of the reports.
AB807,12
23Section
12. 186.235 (7m) of the statutes is amended to read:
AB807,6,424
186.235
(7m) Return of examination reports. Examination reports possessed
25by a credit union are confidential, remain the property of the office of credit unions,
1and shall be returned to the office of credit unions immediately upon request.
This
2subsection does not prohibit a credit union from providing an examination report to
3its attorneys, independent certified public accountants, or other consultants or
4advisers who have agreed in writing to maintain the confidentiality of the report.
AB807,13
5Section
13. 186.235 (16) of the statutes is renumbered 186.235 (16) (a) and
6amended to read:
AB807,6,127
186.235
(16) (a)
At Except as provided in par. (b), at least once every 18 months,
8the office of credit unions shall examine the records and accounts of each credit
9union. For that purpose the office of credit unions shall have full access to, and may
10compel the production of, each credit union's records and accounts. The office of
11credit unions may administer oaths to and examine each credit union's officers and
12agents.
AB807,14
13Section
14. 186.235 (16) (b) of the statutes is created to read:
AB807,6,1614
186.235
(16) (b) In lieu of the examination under par. (a), the office of credit
15unions may accept an examination conducted by the national credit union
16administration.
AB807,15
17Section
15. 186.70 (title) of the statutes is amended to read:
AB807,6,18
18186.70 (title)
Record search; members' inspection of records.
AB807,16
19Section
16. 186.70 of the statutes is renumbered 186.70 (1) and amended to
20read:
AB807,7,621
186.70
(1) A credit union is entitled to reimbursement for expenses and costs
22incurred in searching for, reproducing and transporting books, papers, records and
23other data required to be produced by legal process, unless otherwise prohibited by
24law from collecting these expenses and costs or unless the person seeking the
25production is a government unit, as defined in s. 108.02 (17). The expenses and costs
1shall be paid by persons seeking such production. If a credit union is entitled to
2reimbursement under this
section subsection, a credit union may not be required to
3produce books, papers, records and other data in response to legal process unless the
4expenses and costs, identified in an itemized invoice to be provided by the credit
5union, are paid or unless payment is tendered to the credit union in cash or by
6certified check or draft.
AB807,17
7Section
17. 186.70 (2) of the statutes is created to read:
AB807,7,108
186.70
(2) (a) A group of members of a credit union has the right, upon
9submission of a petition to the credit union that satisfies the requirements under par.
10(b), to inspect and copy nonconfidential portions of all of the following:
AB807,7,1111
1. The credit union's accounting books and records.
AB807,7,1312
2. The credit union's minutes of the proceedings of the credit union's members,
13board of directors, and committees of directors.
AB807,8,614
(b) The petition under par. (a) shall describe the particular records to be
15inspected and state a proper purpose for the inspection, which must be a purpose
16related to the protection of the members' financial interests in the credit union. The
17petition shall state that the petitioners as a whole, or certain named petitioners,
18agree to pay the direct and reasonable costs associated with search and duplication
19of requested material. The petition shall also state that the inspection is not desired
20for any purpose other than the stated purpose; that the members signing the petition
21will not sell or offer for sale any information obtained from the credit union; and that
22the members signing the petition have not within 5 years immediately preceding the
23signature date sold or offered for sale any information acquired from the credit union
24or aided or abetted any person in procuring any information from the credit union
25for purposes of sale. The petition shall name one member, and one alternate member,
1who shall represent the petitioners on issues such as inspection procedures, costs,
2and potential disputes. At least one percent of the credit union's members, with a
3minimum of 20 members and a maximum of 500 members, must sign the petition.
4Each member who signs the petition must have been a member of the credit union
5for at least 180 days at the time the petitioners submit the petition to the credit
6union.
AB807,8,147
(c) 1. A credit union shall respond to petitioners within 14 days of receiving a
8petition under par. (b). In its response, a credit union shall inform petitioners either
9that it will provide inspection of the requested material and, if so, when, or, if a credit
10union is going to withhold all or part of the requested material, it shall inform
11petitioners what part of the requested material it intends to withhold and the
12reasons for withholding the requested material. As soon as possible after receiving
13a petition, a credit union shall schedule inspection and copying of nonconfidential
14requested material it determines petitioners may inspect and copy.