LRB-2990/1
ARG:emw
2021 - 2022 LEGISLATURE
July 26, 2021 - Introduced by Representatives Murphy, Callahan, Baldeh,
Edming, Goyke, Krug, Kuglitsch, Loudenbeck, Rozar, Subeck, Tittl,
Tusler and Wittke, cosponsored by Senators Stafsholt, Bewley, Carpenter,
Jacque, Ringhand and Wirch. Referred to Committee on Financial
Institutions.
AB478,1,9
1An Act to repeal 186.235 (21);
to renumber and amend 186.11 (2);
to amend
2186.07 (7), 186.098 (1), 186.113 (15) (a), 186.115 (2), 186.118 (1), 186.118 (3) (a)
3(intro.), 186.118 (4), 186.118 (5), 186.235 (14) (c), 214.04 (21) (b), 215.13 (46) (a)
41., 221.0303 (2), 227.10 (2m), 227.14 (2) (a) 8., 227.20 (3) (c), 227.24 (1) (b) and
5227.24 (1) (d); and
to create 186.11 (2) (b) and (c), 186.113 (26), 186.118 (3m)
6and 227.01 (13) (yu) of the statutes;
relating to: authorized activities and
7operations of credit unions, automated teller machines of financial institutions,
8repealing rules promulgated by the Department of Financial Institutions, and
9providing an exemption from rule-making procedures.
Analysis by the Legislative Reference Bureau
This bill makes various changes related to the authorized activities and
operations of credit unions. The bill also repeals certain administrative rules related
to the placement or operation of automated teller machines (ATMs) by financial
institutions.
Under current law, the Office of Credit Unions (OCU) in the Department of
Financial Institutions regulates credit unions in this state. Current law specifies
various authorized activities and powers of credit unions.
Parity with federally chartered credit unions
Current law includes the following provisions relating to parity between
federally chartered and state-chartered credit unions:
1. OCU must establish, by rule, a list of activities and powers incidental to the
business of a credit union that are authorized for federally chartered credit unions
as of April 18, 2014. A credit union chartered under Wisconsin law
(Wisconsin-chartered credit union) may engage in any activity or exercise any power
listed by OCU in addition to exercising any other power authorized for the credit
union. After April 18, 2014, if any additional activity or power incidental to the
business of a credit union becomes authorized for federally chartered credit unions,
OCU must make a determination, within 30 days after the activity or power becomes
authorized, as to whether the activity or power should also be authorized for
Wisconsin-chartered credit unions. In making this determination, OCU must
consider specified factors and, if OCU determines that the activity or power
authorized for federally chartered credit unions should also be authorized for
Wisconsin-chartered credit unions, OCU must, by rule, add the activity or power to
the list. An OCU rule that includes an activity or power in the list is exempt from
most administrative rule-making requirements, but deleting an activity or power
from the list or modifying the activity or power on the list requires OCU to go through
the normal rule-making process.
2. A credit union may undertake any activity, exercise any power, or offer any
financially related product or service that any other provider of financial products
or services may undertake, exercise, or provide or that OCU finds to be financially
related if OCU has specified, by rule, the activity, power, product, or service as one
that may be undertaken, exercised, or offered by a credit union.
3. OCU may, by rule, authorize credit unions to exercise any power under the
notice, disclosure, or procedural requirements governing federally chartered credit
unions or to make any loan or investment or exercise any right, power, or privilege
of federally chartered credit unions permitted under federal law if the Credit Union
Review Board approves. Such a rule may not restrict powers granted to credit unions
or affect provisions of the Wisconsin Consumer Act.
The bill makes the following changes to these provisions: 1) with respect to item
1., above, 30 days after an activity or power becomes authorized for federally
chartered credit unions, the activity or power also becomes authorized for
Wisconsin-chartered credit unions unless otherwise noted by an OCU general order
within this 30-day period; 2) with respect to item 2., above, OCU specifies the
activity, power, product, or service that may be undertaken, exercised, or offered by
a credit union by OCU guidance, not OCU rule; and 3) item 3., above, is repealed.
Credit union property
Under current law, a credit union may purchase, hold, and dispose of property
as necessary for or incidental to its operations.
The bill specifies that a credit union may purchase, lease, hold, and convey
certain real estate, including real estate conveyed to the credit union in satisfaction
of a debt or foreclosed real estate, subject to guidance by OCU and a five-year limit
on holding the real estate.
Off-site ATMs
Under current law, a bank, savings bank, savings and loan association, or credit
union (collectively, financial institution) may acquire, place, and operate, or
participate in the acquisition, placement, and operation of, at locations away from
the financial institution, what is variously referred to as customer bank
communications terminals, remote terminals, or remote service units, in accordance
with rules established by OCU and DFI's Division of Banking (division). These
devices are terminals or other facilities that are not located at a financial institution
and through which customers and financial institutions may engage in electronic
transactions that are incidental to the conduct of the business of financial
institutions (collectively, off-site ATMs).
Under current rules of OCU and the division, a financial institution must
provide advance written notice to OCU or the division before acquiring, placing, or
operating an off-site ATM. The bill repeals these rules.
Current statutes provide that OCU or the division may, by order, authorize the
installation and operation of an off-site ATM in a mobile facility, after notice and
hearing upon the proposed service stops of the mobile facility. The bill repeals these
provisions.
Vacancy on board of directors
Current law allows the board of directors of a credit union to remove a director.
Within 60 days after the date of removal of a director, the board of directors must
appoint a director to fill the vacancy. The bill requires a credit union's board of
directors to fill any vacancy, including a vacancy resulting from removal of a director,
within 90 days.
Nonmember loan participation
Under current law, a credit union may make loans to members upon terms
approved by the credit committee, loan officer, or board of directors.
The bill specifies that a credit union may allow nonmember loan participation
as a joint applicant, co-obligor, cosigner, co-borrower, surety, or guarantor.
Supplemental capital
The bill specifies that credit unions may issue or offer supplemental forms of
capital approved by OCU.
Charges for credit union examinations
Current law generally requires OCU to conduct, at least once every 18 months,
examinations of credit unions in which OCU examines the credit union's records and
accounts. OCU must charge the credit union for the cost of the examination, and the
credit union must pay the charge on the day on which the examination is completed.
The bill requires the credit union to pay the charge within 30 days of the
completion of OCU's examination.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB478,1
1Section
1. 186.07 (7) of the statutes is amended to read:
AB478,4,52
186.07
(7) Vacancies. Within
60 90 days
after the date of a
removal vacancy
3on the board of directors, the board of directors shall appoint a director to fill the
4vacancy. The appointee shall serve until a successor is elected at the next annual
5membership meeting.
AB478,2
6Section
2. 186.098 (1) of the statutes is amended to read:
AB478,4,117
186.098
(1) Loan approval. The credit union may make loans to members upon
8terms approved by the credit committee, loan officer
, or board of directors.
The credit
9union may also permit a nonmember to participate in an obligation or extension of
10credit to a member as a joint applicant, co-obligor, cosigner, co-borrower, surety, or
11guarantor.
AB478,3
12Section
3. 186.11 (2) of the statutes is renumbered 186.11 (2) (a) and amended
13to read:
AB478,4,1514
186.11
(2) (a)
A Subject to pars. (b) and (c), a credit union may purchase, hold,
15and dispose of property as necessary for or incidental to its operations.
AB478,4
16Section
4. 186.11 (2) (b) and (c) of the statutes are created to read:
AB478,4,1817
186.11
(2) (b) Subject to guidance issued by the office of credit unions, a credit
18union may purchase, lease, hold, and convey the following types of real estate:
AB478,4,2019
1. Real estate conveyed to the credit union in satisfaction of debts previously
20contracted in the course of the credit union's business.
AB478,4,2321
2. Real estate purchased at sale on judgments, decrees, or mortgage
22foreclosures under securities held by the credit union, but a credit union may not bid
23at a sale a larger amount than is necessary to satisfy its debts and costs.
AB478,4,2524
3. Subject to the approval of the office of credit unions, real estate acquired or
25held by the credit union for any other purpose.
AB478,5,2
1(c) Real estate acquired under par. (b) may not be held for more than 5 years,
2unless an extension is granted by the office of credit unions.
AB478,5
3Section
5. 186.113 (15) (a) of the statutes is amended to read:
AB478,5,214
186.113
(15) (a) Directly or indirectly, acquire, place
, and operate, or
5participate in the acquisition, placement
, and operation of, at locations other than
6its offices, remote terminals, in accordance with rules established by the office of
7credit unions. The rules shall provide that any remote terminal shall be available
8for use, on a nondiscriminatory basis, by any state or federal credit union which has
9its principal place of business in this state, by any other credit union obtaining the
10consent of a state or federal credit union which has its principal place of business in
11this state and is using the terminal and by all members designated by a credit union
12using the terminal. This subsection does not authorize a credit union which has its
13principal place of business outside the state to conduct business as a credit union in
14this state. The remote terminals also shall be available for use, on a
15nondiscriminatory basis, by any state or national bank, state or federal savings bank
16or state or federal savings and loan association, whose home office is located in this
17state, if the bank, savings bank or savings and loan association requests to share its
18use, subject to the joint rules established under s. 221.0303 (2).
The office of credit
19unions by order may authorize the installation and operation of a remote terminal
20in a mobile facility, after notice and hearing upon the proposed service stops of the
21mobile facility.
AB478,6
22Section
6. 186.113 (26) of the statutes is created to read:
AB478,5,2523
186.113
(26) Supplemental capital. Issue or otherwise offer supplemental
24forms of capital in such form and with such conditions as are approved by the office
25of credit unions.
AB478,7
1Section
7. 186.115 (2) of the statutes is amended to read:
AB478,6,92
186.115
(2) Rules Guidance. The activities, powers, products
, and services
3that may be undertaken, exercised
, or offered by credit unions under sub. (1) are
4limited to those specified by
rule of guidance issued by the office of credit unions. The
5office of credit unions may direct any credit union to cease any activity, the exercise
6of any power
, or the offering of any product or service authorized by
rule this
7guidance. Among the factors that the office of credit unions may consider in so
8directing a credit union are the credit union's net worth, assets, management rating
, 9and liquidity ratio and its ratio of net worth to assets.
AB478,8
10Section
8. 186.118 (1) of the statutes is amended to read:
AB478,6,1411
186.118
(1) In addition to any activity or power authorized under ss. 186.098,
12186.11, 186.113, 186.114,
and 186.115,
and 186.235 (21), a credit union organized
13under s. 186.02 may engage in any activity or exercise any power that is listed by the
14office of credit unions under sub. (2) (a)
or
, (3) (b) 1.
, or (3m) (b) 1.
AB478,9
15Section
9. 186.118 (3) (a) (intro.) of the statutes is amended to read:
AB478,6,2316
186.118
(3) (a) (intro.) After April 18, 2014,
and before the effective date of this
17paragraph .... [LRB inserts date], if any activity or power incidental to the business
18of a credit union that is not listed under sub. (2) (a) becomes authorized for federally
19chartered credit unions, within 30 days after the activity or power becomes
20authorized the office of credit unions shall make a determination as to whether the
21activity or power should also be authorized for credit unions organized under s.
22186.02. In making this determination, the office of credit unions shall consider the
23degree to which the following apply with respect to the activity or power:
AB478,10
24Section
10. 186.118 (3m) of the statutes is created to read:
AB478,7,9
1186.118
(3m) (a) On or after the effective date of this paragraph .... [LRB inserts
2date], if any activity or power incidental to the business of a credit union that is not
3listed under sub. (2) (a) or (3) (b) 1. becomes authorized for federally chartered credit
4unions, 30 days after the activity or power becomes authorized the activity or power
5shall also be authorized for credit unions organized under s. 186.02 unless otherwise
6noted by general order of the office of credit unions within this 30-day period. In
7making the determination whether to issue such a general order, the office of credit
8unions shall consider the degree to which the following apply with respect to the
9activity or power:
AB478,7,1110
1. It is necessary, convenient, or useful for effectively carrying out the mission
11or business of a credit union.
AB478,7,1312
2. It is the functional equivalent or logical outgrowth of activities or powers that
13are part of the mission or business of a credit union.
AB478,7,1614
3. It involves risks similar in nature to those already assumed as part of the
15business of the credit union and it is not likely to be detrimental to the overall safety
16and soundness of the credit union.
AB478,7,2017
(b) 1. The office of credit unions shall promulgate a rule adding an activity or
18power to the list of activities and powers established under subs. (2) (a) and (3) (b)
191. unless the office of credit unions has issued a general order otherwise as provided
20in par. (a).
AB478,7,2421
2. The office of credit unions shall submit the proposed rule under subd. 1. to
22the legislative reference bureau in an electronic format approved by the legislative
23reference bureau, and the legislative reference bureau shall publish the proposed
24rule in the notice section of the Wisconsin administrative register under s. 35.93.
AB478,8,6
13. Sections 227.114 (4) and (6), 227.115, 227.135, 227.137, 227.14 (2) (a) 6., (2g),
2(4), and (4m), 227.15, 227.16, 227.17, 227.18, 227.185, 227.19, and 227.30 do not
3apply to the office of credit unions in promulgating a rule under subd. 1. or to any rule
4promulgated by the office of credit unions under subd. 1. Guidelines prescribed by
5executive order of the governor do not apply to the office of credit unions in
6promulgating a rule under subd. 1.
AB478,11
7Section
11. 186.118 (4) of the statutes is amended to read:
AB478,8,108
186.118
(4) The office of credit unions shall publish and maintain on the
9department of financial institutions' Internet site the list of activities and powers
10under
sub. subs. (2) (a)
, (3) (b) 1., and (3m) (b) 1.
AB478,12
11Section
12. 186.118 (5) of the statutes is amended to read:
AB478,8,1512
186.118
(5) If the office of credit unions promulgates a rule listing an activity
13or power as provided in sub. (2) (a)
or, (3) (b) 1.,
or (3m) (b) 1., subs. (2) (b) and (c)
and, 14(3) (b) 2. and 3.
, and (3m) (b) 2. and 3. do not apply to any subsequent rule modifying
15or eliminating the listed activity or power.
AB478,13
16Section
13. 186.235 (14) (c) of the statutes is amended to read:
AB478,8,2417
186.235
(14) (c) In addition to the annual assessment, each credit union shall
18be charged for the cost of every examination made. The examination charge shall
19include the prorated amount of salaries and expenses of all examiners and other
20employees actively engaged in the examination, the salaries and expenses of any
21other person whose services are required in connection with the examination and
22any examination report and any other expenses which may be directly attributable
23to the examination. The examination charge shall be paid
on within 30 days of the
24day on which the examination is completed.
AB478,14
25Section
14. 186.235 (21) of the statutes is repealed.