4. Related statutes or rules:
Section 186.098, Stats., authorizes a credit union to make loans to members. Under Wisconsin law, state-chartered credit unions must be federally insured by the National Credit Union Administration (NCUA). Wis. Stat. s. 185.34. Title 12, section 1757a of the United States Code establishes limits on the amount of “member business loans” that federally insured credit unions may have outstanding at any one time. In 2018, as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act, Congress modified the definition of “member business loan” to exclude loans secured by liens on 1- to 4-family dwellings. (Previously, that exclusion only applied if the dwellings were owner-occupied.) 5. Plain language analysis:
The proposed revisions seek to modify certain rules administered by the Department of Financial Institutions’ Office of Credit Unions, in four respects.
First, the proposed revisions will correct several cross-references that have become outdated. For example, section DFI-CU 56.10 of the Wisconsin Administrative Code expressly adopted the pleading standard formerly contained in s. 263.28 of the 1973 version of the Wisconsin Statutes. Section 263.28 no longer exists, however. Following revisions to the Wisconsin Statutes, the substance of former section 263.28 now appears in modified form at section 802.09 (2). The proposed revisions would update this and other cross-references in DFI-CU that have become outdated. Second, the proposed revisions will repeal certain rules that have become obsolete or unnecessary. Chapter DFI-CU 59, for example, is a 1972 rule authorizing credit unions to invest in “securities issued by hospitals, churches, sanatoria, seminaries, dioceses, and similar type institutions,” subject to certain regulatory restrictions. But such investments are uncommon for state credit unions today, and the rule is unnecessary in any event because there is already a statutory option for credit unions to seek regulatory approval for investments in specific instruments pursuant to Wis. Stat. s. 186.11 (1) (e). Third, the proposed revisions modify the structure of existing rules to conform to current Wisconsin drafting practices. While none of these changes have any substantive effect, they will provide greater clarity and consistency with the drafting style of other statutes and rules administered by the agency.
Fourth, the proposed revisions would update s. DFI-CU 72.02 to reflect changes to the definition of “member business loan” set forth in the federal Economic Growth, Regulatory Relief, and Consumer Protection Act, which Congress enacted in 2018, and accompanying rules governing credit unions. DFI-CU 72.02’s definition of “member business loan” tracked the federal definition prior to those 2018 changes, and this amendment will ensure that the rule language continues to conform to federal law. The Office of Credit Unions previously promulgated a rule making those updates to DFI-CU 72.02, which were approved in early 2020 as provided under chapter 227 of the Wisconsin Statutes (see Clearinghouse Rule 17-063), but the rule was not timely published due to delays by the National Credit Union Administration (NCUA) in approving the final language of the updated definition. The Office has now obtained the NCUA’s final approval, but due to the passage of time, s. 227.14 (6) (d) of the Wisconsin Statutes requires the Office to promulgate the rule again. 6. Summary of, and comparison with, existing or proposed federal regulation:
Title 12, section 1757a (c) of the United States Code and accompanying rules (12 C.F.R. part 723) define the term “member business loan” in a manner that is inconsistent with Wis. Admin. Code s. 77.02. In particular, in 2018 Congress amended 12 U.S.C. s. 1757a to exclude loans secured by 1- to 4- family dwellings from the definition of “member business loan.” (Previously, the law only excluded such loans if the dwellings were owner-occupied). Wis. Admin. Code s. 77.02 has not yet been revised to reflect those recent federal changes. 7. Summary of comments received during preliminary comment period and at public hearing on the statement of scope.
At the preliminary public hearing held on November 16, 2023, the Department received three written comments regarding the scope statement. The Wisconsin Credit Union League and Capital Credit Union each submitted comments in support of the proposed rule, particularly the proposal to revise the definition of “member business loan” to mirror federal law. The Wisconsin Bankers Association submitted a comment opposing the scope statement as too narrow, contending that other provisions of DFI-CU 72 should also be revised to maintain consistency with federal law.
8. Comparison with rules in adjacent states:
Credit unions chartered under the laws of Illinois, Iowa, Michigan, and Minnesota are federally insured and apply the federal definition of “member business loan” set forth in the Economic Growth, Regulatory Relief, and Consumer Protection Act and accompanying rules. See 12 C.F.R. § 723.8(b) (excluding from the definition of “member business loan” any loan that is “fully secured by a lien on a 1- to 4-family dwelling”); 38 Ill. Admin. Code §§ 190.165(b)(2) & 190.165(h)(2) (same). 9. Summary of factual data and analytical methodologies:
Proposed changes to ch. DFI—CU 72 are based on staff regulatory experience and multiple discussions with the Credit Union Review Board and industry groups.
The proposed changes are also based on the Office’s knowledge of and desire to fix erroneous cross-references to state or federal rules or statutes and the need to modify the structure of existing rules in nonsubstantive ways to be consistent with modern drafting practices of the legislative reference bureau and the form and style requirements of the bureau and the legislative council staff.
10. Analysis and supporting documents used to determine effect on small business or in preparation of an economic impact analysis:
The proposed revisions are definitional or non-substantive; they do not require credit unions or other businesses to assume any new duties, change existing practices, or incur new costs.
11. Effect on small business:
The proposed revisions are definitional or non-substantive and will have little effect on small business. As noted above, they do not require credit unions or other businesses to assume any new duties, change existing practices, or incur new costs.
12. Agency contact person:
Thomas Theune
Director, Office of Credit Unions
Wisconsin Department of Financial Institutions
PO Box 8861
Madison, WI 53708-8861
Telephone (608) 267-2608
13. Place where comments are to be submitted and deadline for submission:
Comments may be submitted to the contact person shown below no later than the date on which the public hearing on this proposed rule order is conducted. Information as to the place, date and time of the public hearing will be published in the Wisconsin Administrative Register.
By mail: Marc Shovers, Assistant Chief Legal Counsel, Department of Financial Institutions, PO Box 8861, Madison, WI 53708-8861.
By delivery: Marc Shovers, Assistant Chief Legal Counsel, Department of Financial Institutions, 4822 Madison Yards Way, North Tower, Madison, WI 53705.
Rule Text
SECTTION 1. DFI-CU 51.01 is amended to read:
DFI-CU 51.01 (1) A credit union member shall be considered as is a person whose application has been approved in accordance with the provisions of as provided under the credit union’s by-laws. Said The person shall pay the entrance fee only if required to do so by resolution of the board of directors and shall subscribe for at least one share of stock and who shall. The person may either pay for this share in full upon credit union approval of the person’s application or may make the an initial payment thereon and shall and then pay the outstanding balance within 3 months.
SECTTION 2. DFI-CU 54.02 (5) (intro.) and (a) to (d) is amended to read:
DFI-CU 54.02 (5) (intro.) “Market value" means the most probable price, which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby where all of the following apply:
(a) Buyer and seller are typically motivated;.
(b) Both parties are well informed or well advised, and acting in what they consider their own best interests;.
(c) A reasonable time is allowed for exposure in the open market;.
(d) Payment is made in terms of cash in U.S. dollars or in terms of comparable financial arrangements comparable thereto; and.
