2019 - 2020 LEGISLATURE
September 27, 2019 - Introduced by Senators Marklein, Feyen,
and Kapenga, cosponsored by Representatives Katsma,
Doyle, Felzkowski, Horlacher, Kitchens, Quinn, Skowronski, Tusler and
Zimmerman. Referred to Committee on Agriculture, Revenue and Financial
1An Act to repeal
15.07 (1) (b) 5., 15.07 (5) (g), 15.185 (3) and 227.53 (1) (b) 2.; 2to amend
15.07 (1) (b) 1., 15.07 (5) (b), 15.185 (1), 71.91 (6) (c) 1., 71.91 (6) (d) 3
1., 214.01 (1) (sr), 215.01 (22), 220.02 (5), 220.035 (title), 220.035 (1) (a), 220.035 4
(2), 220.035 (3), 220.035 (6), 220.04 (1) (a), 220.04 (4), 220.04 (6), 220.04 (7) (b) 5
(intro.), 220.04 (8), 220.04 (9) (f) 2., 220.04 (12), 220.05 (2), 220.06 (1m), 220.06 6
(2), 220.07 (2), 220.08 (1), 220.08 (3a), 220.08 (9), 220.085, 221.0202 (5), 7
221.0205, 221.0324 (9), 221.0702 (3), 221.1006, 223.01, 224.725 (1), 227.52 (3), 8
227.53 (1) (a) 1., 227.53 (1) (b) 4., 227.53 (1) (d), 403.312 (2) (c) 1., 705.04 (2) 9
(intro.), 705.04 (2g), 705.06 (3) and 812.18 (1); and to create
71.91 (6) (a) 1r., 10
71.91 (6) (d) 4., 224.46, 224.725 (1r), 705.06 (2m) and 812.19 (4) of the statutes; 11relating to: P.O.D. accounts and loan obligations to financial institutions; the
12duty of a bank to make payment on a lost, destroyed, or stolen cashier's check,
13teller's check, or certified check; providing temporary authority to act as a
14mortgage loan originator while a license application is pending; property
1subject to garnishment or tax levy in possession of a financial institution;
2entities that provide to financial institutions electronic data processing
3services; loans to state banks by a Federal Home Loan Bank; and consolidating
4the Banking Review Board and Savings Institutions Review Board in the
5Department of Financial Institutions.
Analysis by the Legislative Reference Bureau
This bill allows a financial institution that has established a payable-on-death
(P.O.D.) account and made a loan to the P.O.D. account owner to, upon the death of
the account owner, withhold distribution to the P.O.D. account beneficiary of an
amount necessary to satisfy the account owner's loan obligation to the financial
Current law allows a depositor of a financial institution to establish a P.O.D.
account under which the sums on deposit at the time of the depositor's death are
transferred to a designated P.O.D. beneficiary and are not subject to distribution by
will or otherwise as part of the deceased depositor's estate.
Under this bill, if the financial institution has made a loan to the depositor and
has any lien right, right to setoff, or security interest in the P.O.D. account resulting
from the loan, then upon the depositor's death, the financial institution may retain
control of all sums on deposit in the P.O.D. account to the extent necessary to exercise
its lien right or right to setoff or to protect its security interest. The financial
institution must then pay the remaining balance of the account to the P.O.D.
Bank's payment duty on lost, destroyed, or stolen instrument
This bill reduces the period, from 90 days to 14 days, after certain checks are
issued or guaranteed before the issuing or guaranteeing bank is obligated to pay the
amount of the check to a person who meets specified requirements and claims that
the check has been lost, destroyed, or stolen.
Under current law, if certain requirements are satisfied, a person may claim the
right to receive the amount of a cashier's check, teller's check, or certified check that
was lost, destroyed, or stolen by communicating the claim to the obligated bank (the
issuer or guarantor of the check), describing the check with reasonable certainty, and
requesting payment of the amount of the check. If various requirements are
satisfied, the obligated bank must pay the amount of the check to the claimant on the
later of the time that the claim is asserted or the 90th day after the date of the
cashier's check or teller's check or, for a certified check, the 90th day after the date
of the obligated bank's guarantee to honor the check. Payment to the claimant
discharges all liability of the obligated bank with respect to the check. However,
under certain circumstances, the claimant must refund the payment to the obligated
bank if the check is subsequently presented for payment by a person with certain
Under this bill, if all applicable requirements are satisfied, the obligated bank
must pay the claimant the amount of the lost, destroyed, or stolen check on the later
of the time that the claim is asserted or the 14th day after the date of the cashier's
check or teller's check or, for a certified check, the 14th day after the date of the
obligated bank's guarantee to honor the check.
Mortgage loan originators
This bill provides an applicant for a mortgage loan originator license, under
limited circumstances, with temporary authority to act as a mortgage loan originator
while the application is pending with the Department of Financial Institutions.
Under current law, with certain exceptions, a person may not engage in
business as a mortgage banker, mortgage broker, or mortgage loan originator unless
the person is licensed as such by DFI. A mortgage banker is a person that originates
residential mortgage loans (loans) for itself or for another person; sells loans or
interests in loans to another person; or services loans or provides escrow services.
A mortgage broker is a person that, among other activities, assists others, for
compensation, in obtaining or applying for loans, but does not make underwriting
decisions or close loans. A mortgage loan originator is an individual who, for
compensation, takes loan applications or offers or negotiates terms of a loan. Certain
of DFI's licensing and registration functions are administered through the
Nationwide Mortgage Licensing System and Registry (NMLSR), as required under
the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008.
Under current law, state and federally chartered financial institutions
(depository institutions) are not required to be licensed as mortgage bankers or
mortgage brokers. A depository institution may register with DFI (registered entity)
for the purpose of sponsoring licensed mortgage loan originators that are under the
depository institution's direct control. An individual who is registered with the
NMLSR and employed by the depository institution as a mortgage loan originator
(registered mortgage loan originator) is not required to hold a mortgage loan
originator license issued by DFI.
Also under current law, a mortgage loan originator may act on behalf of only the
mortgage banker, mortgage broker, or registered entity with which that mortgage
loan originator's license is associated in DFI's records. A mortgage loan originator's
license may only be associated with one mortgage banker, mortgage broker, or
registered entity at a time. The mortgage banker, mortgage broker, or registered
entity is responsible for, and must supervise the acts of, the mortgage loan originator
with whom it is associated.
Under this bill, an individual who applies to DFI for a mortgage loan originator
license is considered to have temporary authority to act as a mortgage loan originator
if the individual is employed by a licensed mortgage banker or mortgage broker, was
a registered mortgage loan originator or licensed as a mortgage loan originator in
another state, and meets certain other requirements, including that the individual
was not previously denied a license and has not been convicted of a disqualifying
crime. The period for which the individual has temporary authority begins when the
individual furnishes certain required application information to the NMLSR and
ends upon the earliest of certain events, including DFI's granting or denial of the
license. During this period, the individual is associated with the mortgage banker
or mortgage broker employing the individual and is considered to have mortgage
loan originator authority subject to all applicable requirements, including duties
imposed on the associated mortgage banker or mortgage broker.
Financial institution's possession of property subject to garnishment
This bill specifies that a financial institution in possession of a debtor's property
subject to garnishment or tax levy is liable for the surrender of this property only
upon expiration of a reasonable time to comply with the garnishment directive or
demand by the Department of Revenue.
Under current law, a creditor who has obtained judgment against a debtor may
proceed against any third party in possession of the debtor's property by commencing
a garnishment action. From the time of service on the third party (referred to in a
garnishment action as a garnishee) of the summons and complaint, the garnishee is
liable to the creditor for the debtor's property then in the garnishee's possession or
under the garnishee's control, up to the amount of the creditor's claim.
Also under current law, DOR has certain procedures available to collect unpaid
taxes. Among these, DOR may levy upon property belonging to the person
responsible for the unpaid taxes. Upon demand by DOR, a third party in possession
of property subject to the levy must surrender the property, and the third party is
liable to DOR for the value of the property if it is not surrendered.
Under this bill, if the third-party garnishee in a garnishment action, or the
third party to whom a demand is made by DOR to surrender property subject to a tax
levy, is a financial institution, the financial institution is liable for the surrender of
the subject property only upon expiration of a reasonable time to comply with the
garnishment summons or demand by DOR.
Data processing services provided to financial institutions
This bill creates certain provisions applicable to entities that provide to
financial institutions electronic data processing services (independent data
processing servicers). Under the bill, if a financial institution transfers or otherwise
makes available to an independent data processing servicer any data from the
financial institution's records, this data remains the property of the financial
institution, and the independent data processing servicer has no right, title, or
interest in, or claim to legal ownership of, the data. Also under the bill, an
independent data processing servicer may not enter into a contract with a financial
institution unless the contract discloses in separate contract provisions 1) all fees or
charges that the independent data processing servicer may impose on the financial
institution; and 2) any formula or other grounds that the independent data
processing servicer may apply or rely upon to terminate the contract.
Federal Home Loan Bank loans
This bill eliminates certain limitations on loans to state banks made by a
Federal Home Loan Bank.
Under current law, a state bank may become a member of a Federal Home Loan
Bank and borrow money from the Federal Home Loan Bank for a term not to exceed
20 years. The state bank may pledge bank assets having a value that does not exceed
two times the amount of the loan as collateral to secure the loan, but the total assets
pledged may not exceed four times the amount of the bank's capital.
This bill eliminates, with respect to a loan to a bank from a Federal Home Loan
Bank, the 20-year term limitation and the limitation on the value of bank assets that
may be pledged as collateral to secure the loan.
Banking Review Board and Savings Institutions Review Board
This bill renames the Banking Review Board as the Banking Institutions
Review Board and consolidates it with the Savings Institutions Review Board.
Current law creates in DFI a five-member Banking Review Board and a
five-member Savings Institutions Review Board. The Banking Review Board
advises the Division of Banking (division) in DFI on matters related to banks and
banking and reviews the division's administrative actions related to banks and
banking. The Savings Institutions Review Board advises the division on matters
related to savings banks and savings and loan associations and reviews the division's
administrative actions related to savings banks and savings and loans.
Under the bill, the renamed and consolidated Banking Institutions Review
Board has ten members until May 1, 2020, six members after May 1, 2020, and until
May 1, 2021, and five members after May 1, 2021. The functions of the Banking
Institutions Review Board are the same as the current functions, merged, of the
Banking Review Board and Savings Institutions Review Board
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:
15.07 (1) (b) 1. of the statutes is amended to read:
(b) 1. Banking institutions
15.07 (1) (b) 5. of the statutes is repealed.
15.07 (5) (b) of the statutes is amended to read:
(b) Members of the banking institutions
review board, $25 per day but 6
not to exceed $1,500 per year.
15.07 (5) (g) of the statutes is repealed.
15.185 (1) of the statutes is amended to read:
15.185 (1) Banking institutions review board.
There is created in the 2
department of financial institutions a banking institutions
review board consisting 3
of 5 10
persons, until May 1, 2020, and consisting of 6 persons after May 1, 2020.
4The members of the board shall be
appointed for staggered 5-year terms. At least 5
3 members shall be experienced bankers or savings institution employees
having at 6
least 5 years' experience in the banking or savings institution
business. No member 7
is qualified to act in any matter involving a bank or savings institution
in which the 8
member is an officer, director,
or stockholder, or to which the member is indebted.
15.185 (1) of the statutes, as affected by 2019 Wisconsin Act .... (this 10
act), is amended to read:
15.185 (1) Banking institutions review board.
There is created in the 12
department of financial institutions a banking institutions review board consisting 13
of 10 5
persons until May 1, 2020, and consisting of 6 persons after May 1, 2020. The
14members of the board shall be,
appointed for staggered 5-year terms. At least 3 15
members shall be experienced bankers or savings institution employees having at 16
least 5 years' experience in the banking or savings institution business. No member 17
is qualified to act in any matter involving a bank or savings institution in which the 18
member is an officer, director, or stockholder, or to which the member is indebted.
15.185 (3) of the statutes is repealed.
71.91 (6) (a) 1r. of the statutes is created to read:
(a) 1r. “Financial institution" has the meaning given in s. 214.01 (1) 22
71.91 (6) (c) 1. of the statutes is amended to read:
(c) 1. Except as provided in subd. 2.
and par. (d) 4.
, any person in 25
possession of, or obligated with respect to, property subject to levy upon which a levy
has been made shall, upon demand of the department, surrender that property 2
unless it is subject to attachment or execution under judicial process, or discharge 3
that obligation, to the department.
71.91 (6) (d) 1. of the statutes is amended to read:
(d) 1. Any Except as provided in subd. 4., any
person, including an 6
officer or employee, who fails to surrender property that is subject to levy upon 7
demand of the department is liable to the department for a sum equal to the value 8
of the property not surrendered, but not exceeding the amount of taxes for the 9
collection of which that levy was made, together with costs and interest at the rate 10
of 18 percent per year from the date of that levy. Any amount, other than costs, 11
recovered under this paragraph shall be credited against the tax liability for the 12
collection of which that levy was made. The liability under this paragraph may be 13
assessed, levied and collected as are additional income or franchise taxes or may be 14
recovered by the department in a civil action.
71.91 (6) (d) 4. of the statutes is created to read:
(d) 4. If a financial institution is in possession of, or obligated with 17
respect to, property subject to levy upon which a levy has been made, the financial 18
institution is liable under this paragraph for failure to surrender that property or 19
discharge that obligation only upon expiration of a reasonable time to comply with 20
the department's demand for the property.
214.01 (1) (sr) of the statutes is amended to read:
(sr) “Review board" means the
institutions review 23
215.01 (22) of the statutes is amended to read:
“Review board" means the
institutions review 2
220.02 (5) of the statutes is amended to read: