LRB-2800/1
ARG:amn&wlj
2023 - 2024 LEGISLATURE
November 27, 2023 - Introduced by Representatives Katsma, Murphy, O'Connor,
Allen, Behnke, Dittrich, Goeben, Gundrum, Novak, Penterman and
Rettinger, cosponsored by Senators Stafsholt, Cabral-Guevara,
Felzkowski, Marklein and Taylor. Referred to Committee on Financial
Institutions.
AB715,1,12
1An Act to repeal 138.052 (7e) and (7m), 138.056 (6) and 215.21 (2);
to renumber
2and amend 186.11 (2);
to amend 34.08 (2), 38.20 (2) (e), 67.12 (12) (a), 138.052
3(12) (a), 186.07 (7), 186.113 (15) (a), 186.118 (3) (a) (intro.), 186.235 (14) (c),
4214.04 (21) (b), 215.13 (39), 215.13 (46) (a) 1., 215.21 (15), 221.0303 (2), 941.38
5(1) (b) 21., 946.82 (4) and 969.08 (10) (b); and
to create 186.11 (2) (b) and (c),
6186.113 (26), 227.01 (13) (yu) and 943.825 of the statutes;
relating to:
7authorized activities and operations of credit unions; the lending area of
8savings and loan associations; automated teller machines; residential
9mortgage loans and variable rate loans; payments for public deposit losses in
10failed financial institutions; promissory notes of certain public bodies;
11repealing rules promulgated by the Department of Financial Institutions;
12providing an exemption from rule-making procedures; and providing a penalty.
Analysis by the Legislative Reference Bureau
Under current law, the Office of Credit Unions (OCU) in the Department of
Financial Institutions (DFI) regulates state-chartered credit unions, and DFI's
Division of Banking (division) regulates state-chartered banks, savings banks, and
savings and loan (S&L) associations. Current law specifies various authorized
activities and powers of these financial institutions.
This bill does the following with respect to the authorized operations of
financial institutions:
1. Expands the ability of a credit union to purchase, lease, and sell real
property, subject to limitations.
2. Specifies that credit unions may issue or offer supplemental forms of capital
approved by OCU.
3. Repeals certain DFI rules related to the placement or operation of automated
teller machines (ATMs) by financial institutions.
4. Creates the crime of interfering with an ATM.
5. Eliminates a geographical lending restriction for an S&L association.
6. Eliminates certain lender disclosure requirements applicable to residential
mortgage loans and variable rate loans.
7. Extends the maximum maturity date, from 10 to 20 years, of a promissory
note issued by a municipality, county, or school district.
8. Extends the period in which a credit union's board of directors must appoint
a director to fill a board vacancy.
9. Increases the amount of compensation available from DFI for losses
resulting from the deposit of public moneys in a failed financial institution.
10. Extends the period during which OCU must determine whether an activity
or power that becomes authorized for a federally chartered credit union should also
be authorized for a Wisconsin-chartered credit union.
11. Extends the deadline for a credit union to pay OCU for the cost of an OCU
examination.
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.
Supplemental capital
The bill specifies that credit unions may issue or offer supplemental forms of
capital in the form and with the conditions, including those related to the safety and
soundness of the proposed use of the capital and the overall condition of the credit
union, approved by OCU.
Off-site ATMs
Under current law, a bank, savings bank, S&L 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 the division, a financial institution other than a credit
union must provide advance written notice to 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.
Interference with automated teller machines
The bill also creates a Class H felony for intentionally causing impairment or
interruption of use of a financial institution's ATM or customer bank
communications terminal. A Class H felony is punishable by a fine not exceeding
$10,000 or imprisonment not exceeding six years, or both.
Savings and loan association lending areas
Current law specifies the authority of an S&L association to make mortgage
loans but also limits the lending area of an S&L association to a radius of 100 miles
of the S&L association's home office. In general, an S&L association may establish
branch offices within the lending area of its home office.
The bill eliminates the lending-area restriction on an S&L association and,
consequently, the limitation that a branch office must be located within the lending
area.
Residential mortgage loans and variable rate loans
Under current law, a residential mortgage loan generally is a loan secured by
a first lien real estate mortgage on a one-family to four-family dwelling that the
borrower uses as his or her principal residence. Current law imposes various
requirements related to residential mortgage loans, including the following:
1. Before a lender accepts an application or fee in connection with a residential
mortgage loan, the lender must deliver to the potential loan applicant a written
disclosure that contains certain information, including whether an application fee
is refundable and whether the interest rate and other terms of the agreement may
change before the closing date.
2. The lender must provide a written statement to an applicant of the reasons
for adverse action on an application. Delivery of a notice of adverse action in
compliance with federal law satisfies this requirement.
3. The lender must provide written notice to the borrower if the loan servicing
for the residential mortgage loan is sold. The notice must include the name, address,
and telephone number of the new loan servicer.
The bill repeals the requirements identified as 1. to 3. immediately above.
Under current law, a variable rate loan generally is a residential mortgage loan
the terms of which permit the interest rate to be increased or decreased. Current law
imposes various requirements related to variable rate loans, including a disclosure
requirement. Before making a variable rate loan, the lender must disclose specified
information to at least one of the borrowers, including that the loan contract contains
a variable interest rate provision; identification of the index used and its current
base; and rights of the borrower with respect to a change in the interest rate.
The bill repeals these disclosure requirements.
Promissory notes of certain public bodies
Under current law, a public body that has the authority to borrow money and
issue obligations to repay the money out of public funds or revenues and that has the
authority to levy a tax may issue promissory notes for any public purpose. Public
bodies covered by this provision include cities, villages, towns, counties, and school
districts. Each promissory note, with several exceptions, must be repaid within 10
years after the original date of the note. Under the bill, each promissory note must
be repaid within 20 years after the original date of the note.
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.
Public deposit losses
Under current law, the Investment Board (SWIB) and the governing bodies of
counties, municipalities, and certain other local governmental units (collectively,
public depositors) must designate one or more financial institutions in this state for
deposit of all public moneys received by the public depositor. DFI administers a
claims process that repays public depositors for losses that exceed applicable deposit
insurance resulting from a failed or failing financial institution's failure to repay the
deposit of public moneys. The maximum payment that DFI can make to a public
depositor for losses from a single financial institution is $400,000. These loss
payment provisions also apply to local government deposits in the local government
pooled-investment fund managed by SWIB.
The bill increases, from $400,000 to $1,000,000, the maximum payment that
DFI can make to a public depositor for losses from a single financial institution that
exceed deposit insurance.
Parity with federally chartered credit unions
Current law includes certain provisions relating to parity between federally
chartered and state-chartered credit unions. Under one of these provisions, 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. 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.
The bill extends, from 30 days to 60 days, the period during which OCU must
determine whether an additional activity or power authorized for federally chartered
credit unions should also be authorized for Wisconsin-chartered credit unions.
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.
Because this bill creates a new crime or revises a penalty for an existing crime,
the Joint Review Committee on Criminal Penalties may be requested to prepare a
report.
For further information see the state and local 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:
AB715,1
1Section 1
. 34.08 (2) of the statutes is amended to read:
AB715,5,112
34.08
(2) Payments under sub. (1) shall be made in the order in which
3satisfactory proofs of loss are received by the division of banking. The payment made
4to any public depositor for all losses of the public depositor in any individual public
5depository may not exceed
$400,000 $1,000,000 above the amount of deposit
6insurance provided by an agency of the United States at the public depository that
7experienced the loss. Upon a satisfactory proof of loss, the division of banking shall
8direct the department of administration to draw its warrant payable from the
9appropriation under s. 20.144 (1) (a) and the secretary of administration shall pay
10the warrant under s. 16.401 (4) in favor of the public depositor that has submitted
11the proof of loss.
AB715,2
12Section 2
. 38.20 (2) (e) of the statutes is amended to read:
AB715,6,18
138.20
(2) (e) The district purchasing property under this subsection may, with
2approval of the city council or village board involved, pay the purchase price by
3issuing and delivering directly to the city or village the general obligation promissory
4notes or the notes of the district under s. 67.12 (12), except that no referendum may
5be held and the
10-year 20-year limitation on such notes shall be inapplicable to
6such notes issued under this paragraph. Such notes shall mature and be payable at
7such times, in such amounts and at such rate of interest as will amortize and pay
8when due the principal and interest on the outstanding obligations of the city or
9village for technical college purposes. All such notes, upon execution and delivery
10to the city or village, shall in all respects be held and considered as an authorized
11investment under s. 66.0603 (1m) or 67.11 (2) and (3) of the debt service fund created
12for payment of the city or village obligations issued for technical college purposes and
13shall be offset against city or village indebtedness in computing legal debt limit to
14the same extent as other authorized investments of the debt service fund and such
15notes may be sold and hypothecated. If the offset against city or village indebtedness
16under this paragraph is determined to be invalid in any respect, such city or village
17immediately may require the district issuing the promissory notes to such city or
18village to comply with pars. (c) and (d) to the extent necessary to cure such invalidity.
AB715,7,621
67.12
(12) (a) Any municipality may issue promissory notes as evidence of
22indebtedness for any public purpose, as defined in s. 67.04 (1) (b), including but not
23limited to paying any general and current municipal expense, and refunding any
24municipal obligations, including interest on them. Each note, plus interest if any,
25shall be repaid
within 10 years after the original date of the note, except that notes
1issued under this section for purposes of ss. 119.498, 281.58, 281.59, 281.61, and
2292.72 and s. 281.60, 2021 stats., issued to raise funds to pay a portion of the capital
3costs of a metropolitan sewerage district, or issued by a 1st class city or a county
4having a population of 750,000 or more, to pay unfunded prior service liability with
5respect to an employee retirement system, shall be repaid within 20 years after the
6original date of the note.
AB715,4
7Section
4. 138.052 (7e) and (7m) of the statutes are repealed.
AB715,5
8Section
5. 138.052 (12) (a) of the statutes is amended to read:
AB715,7,129
138.052
(12) (a) Any lender violating sub. (2) (b), (5), (5m) (b) 1., (6), (7),
(7e),
10(7m) or (7s), or an escrow agent, as defined in sub. (5m) (a), violating sub. (5m) (b)
112., is liable to the borrower for $500 plus actual damages, costs and reasonable
12attorney fees.
AB715,6
13Section
6. 138.056 (6) of the statutes is repealed.
AB715,7
14Section
7. 186.07 (7) of the statutes is amended to read:
AB715,7,1815
186.07
(7) Vacancies. Within
60 90 days
after the date of a
removal vacancy
16on the board of directors, the board of directors shall appoint a director to fill the
17vacancy. The appointee shall serve until a successor is elected at the next annual
18membership meeting.