AB872: Bill Text

The bill also makes a number of changes relating to trust company banks and to trust accounts. These changes include the following:

1. Modifying the provisions governing the liquidation of failed blanks to permit the division to transfer trust accounts of a failed bank to a successor organization without having the successor assume liability for the past acts of the failed bank.

2. Repealing statutorily specified minimum capital requirements for trust company banks and allowing the division to establish, with the approval of the banking review board, minimum capital requirements for trust company banks.

3. Providing that trust company banks may not accept deposits, other than trust deposits.

4. Eliminating the ability of a trust company bank, with court approval, to transfer to trust estates any mortgages or other securities owned by the trust company bank.

5. Allowing trust service offices to be established at any insured depository institution, not just state or national banks as under current law.

6. Allows trust company banks to maintain adequate errors and omissions insurance coverage in lieu of making an indemnity fund deposit.

Other changes

In addition to the changes regarding state banks and trust company banks, the bill modifies the definition of public depository to require that public depositories have main or branch offices in this state.

Current law contains certain provisions governing residential mortgage loans which regulate prepayments of these loans, escrow accounts, late payment charges on instalments, interest imposed after acceleration or the maturity of a loan and required disclosures. Current law also contains provision governing variable rate loans which regulate the maximum term of these loans, the use of approved indices, notice of interest payment changes and required disclosures. This bill amends these provisions to provide that they are not applicable to loans that are primarily for a business or agricultural purpose.

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:

AB872, s. 1 Section 1. 34.09 of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB872,10,16 34.09 Financial institutions eligible as public depositories. Every federal or state credit union, state bank, federal or state savings and loan association, savings and trust company and federal or state savings bank and every national bank located in this state which complies in all respects as to public deposits with this chapter and will accept payments made by the state under s. 16.412 may be designated as a public depository and may receive and hold public deposits, subject to this chapter, if the financial institution has a branch or main office located in this state, complies with this chapter with respect to public deposits and accepts payments made by the state under s. 16.412. The division of banking shall have has the same powers and duties with regard to making and continuing public deposits in national banks, federal and state credit unions, federal and state savings banks and federal and state savings and loan associations as the powers and duties exercised and performed by the division of banking with regard to public deposits in state banks.

AB872, s. 2 Section 2. 66.04 (2m) (a) of the statutes is amended to read:

AB872,10,19 66.04 (2m) (a) The institution is authorized to exercise trust powers under s. 221.04 (6) 221.0316 or ch. 223.

AB872, s. 3 Section 3. 138.052 (10) of the statutes is renumbered 138.052 (10) (intro.) and amended to read:

AB872,11,1 138.052 (10) (intro.) This section does not apply to loans any of the following:

AB872,11,3 (a) A loan to corporations a corporation or a limited liability companies company.

AB872, s. 4 Section 4. 138.052 (10) (b) of the statutes is created to read:

AB872,11,6 138.052 (10) (b) A loan that is primarily for a business purpose or for an agricultural purpose, as defined in s. 421.301 (4).

AB872, s. 5 Section 5. 138.056 (8) of the statutes is repealed and recreated to read:

AB872,11,8 138.056 (8) Applicability. This section does not apply to any of the following:

AB872,11,9 (a) A loan or forbearance to a corporation or a limited liability company.

AB872,11,11 (b) A loan that is primarily for a business purpose or for an agricultural purpose, as defined in s. 421.301 (4).

AB872,11,12 (c) A reverse mortgage loan, as defined in s. 138.058 (1) (b).

AB872,11,13 (d) A transaction initially entered into before November 1, 1981.

AB872, s. 6 Section 6. 157.19 (2) (a) of the statutes is amended to read:

AB872,11,23 157.19 (2) (a) Except as provided in sub. (5) and the rules promulgated under sub. (4), the cemetery authority may deposit care funds under s. 157.11 (9g), and shall deposit care funds under s. 157.12 (3) and preneed trust funds under s. 440.92, with a financial institution located in this state. The financial institution shall be the trustee of the care funds and preneed trust funds. A bank need not comply with s. 221.04 (6) 221.0316 (1) or (2) or ch. 223 to accept or disburse deposits under this section. The trustee shall invest the care funds and preneed trust funds as provided under s. 881.01, except as provided in sub. (5) and the rules promulgated under sub. (4).

AB872, s. 7 Section 7. 180.1132 (2) (a) of the statutes is amended to read:

AB872,12,3 180.1132 (2) (a) A corporation if a business combination involving the corporation is governed by s. 186.31, 215.53, 215.73, 221.25, 221.565 221.0702 or 223.11 223.21.

AB872, s. 8 Section 8. 180.1150 (3) (h) of the statutes is repealed.

AB872, s. 9 Section 9. 186.113 (15) (a) of the statutes, as affected by 1995 Wisconsin Acts 27 and 55, is amended to read:

AB872,12,23 186.113 (15) (a) Directly or indirectly, acquire, place and operate, or participate in the acquisition, placement and operation of, at locations other than its offices, remote terminals, in accordance with rules established by the office of credit unions. The rules shall provide that any remote terminal shall be available for use, on a nondiscriminatory basis, by any state or federal credit union which has its principal place of business in this state, by any other credit union obtaining the consent of a state or federal credit union which has its principal place of business in this state and is using the terminal and by all members designated by a credit union using the terminal. This subsection does not authorize a credit union which has its principal place of business outside the state to conduct business as a credit union in this state. The remote terminals also shall be available for use, on a nondiscriminatory basis, by any state or national bank, state or federal savings bank or state or federal savings and loan association, whose home office is located in this state, if the bank, savings bank or savings and loan association requests to share its use, subject to the joint rules established under s. 221.04 (1) (k) 221.0303 (2). The office of credit unions by order may authorize the installation and operation of a remote terminal in a mobile facility, after notice and hearing upon the proposed service stops of the mobile facility.

AB872, s. 10 Section 10. 215.13 (46) (a) 1. of the statutes, as affected by 1995 Wisconsin Acts 27 and 55, is amended to read:

AB872,13,20 215.13 (46) (a) 1. Directly or indirectly, acquire, place and operate, or participate in the acquisition, placement and operation of, at locations other than its home or branch offices, remote service units, in accordance with rules established by the division. Remote service units established in accordance with such rules are not subject to sub. (36), (39), (40) or (47) or s. 215.03 (8). The rules of the division shall provide that any such remote service unit shall be available for use, on a nondiscriminatory basis, by any state or federal savings and loan association which has its principal place of business in this state, by any other savings and loan association obtaining the consent of a state or federal savings and loan association which has its principal place of business in this state and is using the terminal and by all customers designated by a savings and loan association using the unit. This paragraph does not authorize a savings and loan association which has its principal place of business outside this state to conduct business as a savings and loan association in this state. The remote service units also shall be available for use, on a nondiscriminatory basis, by any credit union, state or national bank or state or federal savings bank, whose home office is located in this state, if the credit union, bank or savings bank requests to share its use, subject to the joint rules established under s. 221.04 (1) (k) 221.0303 (2). The division by order may authorize the installation and operation of a remote service unit in a mobile facility, after notice and hearing upon the proposed service stops of the mobile facility.

AB872, s. 11 Section 11. 215.13 (51) of the statutes, as affected by 1995 Wisconsin Acts 27 and 55, is amended to read:

AB872,14,3 215.13 (51) Contract for financial services. Contract with a bank that is owned by a bank holding company which also owns the contracting association, to provide products or services under s. 221.04 (1) (p) 221.0301 (8). The bank shall be subject to regulation and examination by the division with regard to services performed under the contract to the same extent as if the services were being performed by the association itself on its own premises.

AB872, s. 12 Section 12. 217.11 (1) of the statutes is amended to read:

AB872,14,7 217.11 (1) Every check sold by any licensee shall bear the name of the licensee clearly imprinted thereon, including the words authorized under s. 221.49 (2) 221.0402 (2) if applicable.

AB872, s. 13 Section 13. 219.08 of the statutes is repealed.

AB872, s. 14 Section 14. 220.04 (6) (a) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB872,14,21 220.04 (6) (a) The division, with the approval of the banking review board, may establish uniform savings rules which shall be adopted by every bank and trust company bank. Such rules may provide the conditions under which banks or trust company banks may accept time deposits and the methods of figuring interest. Such rules may also provide the term of notice of withdrawal and the amounts which may be withdrawn by depositors, which conditions the bank may put in force in times of financial stress by action of its board of directors. The maximum rate of interest on deposits paid by banks whose deposits are not insured by the federal deposit insurance corporation, whether certificates of deposit or book savings deposits, shall be the same as the rate set by the federal deposit insurance corporation for banks whose deposits are insured by it.

AB872, s. 15 Section 15. 220.04 (7) (b) 3. of the statutes is amended to read:

AB872,14,25 220.04 (7) (b) 3. Require the organization to maintain reasonable safeguards to protect fiduciary property including the maintenance of an indemnity fund in the same manner as that required of trust company banks under s. 223.02 (1).

AB872, s. 16 Section 16. 220.04 (9) (a) 2. of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB872,15,5 220.04 (9) (a) 2. "Regulated entity" means a bank, trust company bank and any other entity which is described in s. 220.02 (2) or 221.56 221.0526 as under the supervision and control of the division.

AB872, s. 17 Section 17. 220.04 (10) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB872,15,20 220.04 (10) If it appears to the division that a person has engaged or is about to engage in an act or practice constituting a violation of the laws of this state relating to banks and banking, including this chapter, chs. 217, 218 and 221 to 224 and s. 138.09, or a rule promulgated or order issued under those laws, the division may bring an action in the name of the state in the circuit court of the appropriate county to enjoin the acts or practices and to enforce compliance with the laws, rules or orders, or the division may refer the matter to the district attorney of the appropriate county or, if the alleged violation may be enforced by the attorney general under sub. (12) or s. 220.12, 221.18, 221.205, 221.28 221.1005 or 224.06 (7) or is statewide in nature, to the attorney general. Upon a proper showing, the court may grant a permanent or temporary injunction or restraining order, appoint a receiver for the defendant or the defendant's assets or order rescission of any acts determined to be unlawful. The court may not require the division to post a bond.

AB872, s. 18 Section 18. 220.04 (11) of the statutes is created to read:

AB872,15,24 220.04 (11) In order to carry out ss. 220.07, 220.08 and 221.1005, the division may commence and maintain in the division's name any and all actions necessary or proper to enforce any of said sections.

AB872, s. 19 Section 19. 220.04 (12) of the statutes is created to read:

AB872,16,17 220.04 (12) If the division has information that causes the division to believe that any bank, trust company bank, or any other person subject in whole or in part to supervision or control by the division, or any officer, employe, member or manager thereof, has violated any law, rule or order that subjects the person to prosecution for a criminal offense or to a penalty, the division shall bring such information to the attention of the banking review board, with the division's recommendation in writing as to action to be taken. The banking review board shall, if in its judgment probable cause exists for believing that a criminal offense has been committed, or a penalty incurred, call the facts and information to the attention of the attorney general whose duty it shall be to cause prosecution or other action to be instituted if, in the attorney general's judgment, the facts warrant. This subsection does not prevent the institution of any prosecution by any district attorney of this state with or without any advice or act on the part of the attorney general. This subsection does not preclude the division, in any case where the division deems it important to act immediately, from causing any arrest and prosecution where the division is satisfied that there is reason to believe the offense has been committed and that prosecution should be immediately commenced.

AB872, s. 20 Section 20. 220.06 (1m) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB872,17,13 220.06 (1m) No division employe may examine a bank or licensee in which that person is interested as a stockholder, officer or employe. No division employe may examine a bank or licensee located in the same village, city or county with any bank or licensee in which that person is so interested. Employes in the division, and each member and employe of the banking review board, shall keep secret all facts and information obtained in the course of examinations or from reports not under s. 221.15 221.1002 (1) filed by a bank or licensee with the division, except so far as the public duty of the person requires reporting upon or taking special action regarding the affairs of any bank or licensee, and except when called as a witness in any criminal proceeding or trial in a court of justice. The division may furnish to the federal deposit insurance corporation or to any regulatory authority for state or federal financial institutions, insurance or securities a copy of any examination made of any such bank or licensee or of any report made by such bank or licensee and may give access to and disclose to the corporation or to any regulatory authority for state or federal financial institutions, insurance or securities any information possessed by the division with reference to the conditions or affairs of any such insured bank or licensee if the regulatory authority agrees to treat all information received with the same degree of confidentiality as applies to reports of examination that are in the custody of the division.

AB872, s. 21 Section 21. 220.075 of the statutes, as affected by 1995 Wisconsin Act 27, is repealed.

AB872, s. 22 Section 22. 220.08 (3am) of the statutes is created to read:

AB872,17,20 220.08 (3am) On taking possession of a bank for liquidation, the division may transfer the trust accounts of the bank to another entity with fiduciary powers. Neither the division nor the fiduciary to whom the trust accounts are transferred is liable for the past acts of the bank relating to the trust accounts.

AB872, s. 23 Section 23. 220.09 of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB872,18,10 220.09 Indemnity fund, national bank. Every national bank which has been granted a special permit by the federal reserve board authority under federal law to act in a fiduciary capacity under the provisions of subsection (k) of section 11, of the federal reserve act shall deposit with the state treasurer security, approved by the division, in the manner which is required of trust company banks organized under shall comply with s. 223.02. Such securities shall be of the same nature as the security designated by the provisions of such section for the deposit by trust companies organized under the laws of this state. Such national bank, so long as it shall continue solvent and comply with the laws of this state applicable thereto, may be permitted by the division to collect the interest on the security so deposited and from time to time withdraw the said securities or any part thereof provided that securities or cash of the amount and value required by this section shall at all times be maintained on deposit.

AB872, s. 24 Section 24. Chapter 221 of the statutes, as affected by 1995 Wisconsin Acts 27 and 55, is repealed and recreated to read:

AB872,18,14 Chapter 221 State banks

AB872,18,16 SUBCHAPTER I GENERAL PROVISIONS

AB872,18,18 221.0101 Title. This chapter may be cited as the "Wisconsin banking law".

AB872,18,19 221.0102 Definitions. In this chapter:

AB872,18,21 (1) "Articles of incorporation" includes amended and restated articles of incorporation.

AB872,18,23 (2) "Authorized shares" means the shares of all classes that a bank is authorized to issue.

AB872,18,24 (3) "Capital stock" means the stock of a bank, other than preferred stock.

AB872,19,2 (4) "Capital" means, with respect to any bank, the sum of all of the following, less the bank's intangible assets:

AB872,19,3 (a) The bank's capital stock.

AB872,19,4 (b) The bank's preferred stock.

AB872,19,5 (c) The bank's undivided profits.

AB872,19,7 (d) Outstanding notes and debentures of the bank that are legally issued and sold by the bank and approved by the division under s. 221.0318 (2).

AB872,19,9 (5) "Record date" means the date on which a bank determines the identity of its shareholders for purposes of this chapter.

AB872,19,12 (6) "Shareholder" means the person in whose name shares are registered in the records of a bank or, to the extent of the rights granted by a nominee certificate on file with a bank, the beneficial owner of the shares.

AB872,19,14 (7) "Subscriber" means a person who subscribes for shares in a bank, whether before or after incorporation of the bank.

AB872,19,17 (8) "Treasury shares" means shares of a bank that have been issued, that have been subsequently acquired by and belong to the bank, and that have not been canceled or restored to the status of authorized but unissued shares.

AB872,19,18 (9) "Voting group" means any of the following:

AB872,19,21 (a) All shares of one or more classes or series that, under the articles of incorporation or this chapter, are entitled to vote and be counted together collectively on a matter at a meeting of shareholders.

AB872,19,23 (b) All shares that under the articles of incorporation or this chapter are entitled to vote generally on a matter.

AB872,20,3 221.0103 Notice. (1) Applicability. This section applies to a notice that is required under this chapter or that is made subject to this section by express reference to this section.

AB872,20,6 (2) When oral notice permitted. A person shall give notice in writing, except that notices to or from a bank may be given orally, if permitted by the bank's articles of incorporation or bylaws and not otherwise prohibited by this chapter.

AB872,20,13 (3) Method of providing written notice. Unless otherwise provided in the articles of incorporation or bylaws, notice may be communicated in person, by telephone, telegraph, teletype, facsimile or other form of wire or wireless communication, or by mail or private carrier. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published or by radio, television or other form of public broadcast communication.

AB872,20,16 (4) Date notice is effective. (a) Except as provided in par. (b) and ss. 221.0607 (2) and 221.0622 (1), written notice is effective on the earliest of the following:

AB872,20,17 1. On the date received.

AB872,20,19 2. Five days after deposit of the notice in the U.S. mail, if mailed postpaid and correctly addressed.

AB872,20,22 3. On the date shown on the return receipt, if the notice is sent by registered or certified mail, return receipt requested, and if the receipt is signed by or on behalf of the addressee.