AB563: Bill Text Engrossed

AB563-engrossed,16,17 (6) Foreign national government bonds. A universal bank may purchase general obligation bonds issued by any foreign national government if the bonds are payable in United States funds. The aggregate investment in these foreign bonds may not exceed 3% of the capital of the universal bank, except that this limitation does not apply to bonds of the Canadian government and Canadian provinces that are payable in United States funds.

AB563-engrossed,16,25 (7) Limits established by board. (a) When financial statements required. A universal bank may not make or renew a loan or loans, the aggregate total of which exceeds the level established by the board of directors without being supported by a signed financial statement of the borrower, unless the loan is secured by collateral having a value in excess of the amount of the loan. A signed financial statement furnished by the borrower to a universal bank in compliance with this paragraph must be renewed annually as long as the loan or any renewal of the loan remains unpaid and is subject to this paragraph.

AB563-engrossed,17,5 (b) Treatment of loans complying with limits. A loan or a renewal of a loan made by a universal bank in compliance with par. (a), without a signed financial statement, may be treated by the universal bank as entirely independent of any secured loan made to the same borrower if the loan does not exceed the limitations provided in this section.

AB563-engrossed,17,6 (8) Exceptions. This section does not apply to any of the following:

AB563-engrossed,17,10 (a) Liabilities secured by certain short-term federal obligations. A liability that is secured by not less than a like amount of direct obligations of the United States which will mature not more than 18 months after the date on which such liabilities to the universal bank are entered into.

AB563-engrossed,17,14 (b) Certain federal and state obligations or guaranteed obligations. A liability that is a direct obligation of the United States or this state, or an obligation of any governmental agency of the United States or this state, that is fully and unconditionally guaranteed by the United States or this state.

AB563-engrossed,17,16 (c) Commodity Credit Corporation liabilities. A liability in the form of a note, debenture or certificate of interest of the Commodity Credit Corporation.

AB563-engrossed,17,20 (d) Discounting bills of exchange or business or commercial paper. A liability created by the discounting of bills of exchange drawn in good faith against actually existing values or the discounting of commercial or business paper actually owned by the person negotiating the same.

AB563-engrossed,18,2 (e) Certain other federal or federally guaranteed obligations. In obligations of, or obligations that are fully guaranteed by, the United States and in obligations of any federal reserve bank, federal home loan bank, the Student Loan Marketing Association, the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Export-Import Bank of Washington or the Federal Deposit Insurance Corporation.

AB563-engrossed,18,16 (9) Additional authority. (a) In general. In addition to the authority granted under subs. (1) to (8), and except as provided in par. (b), a universal bank may lend under this subsection, through the universal bank or subsidiary of the universal bank, to all borrowers from the universal bank and all of its subsidiaries, an aggregate amount not to exceed 20% of the universal bank's capital. Neither a universal bank nor any subsidiary of the universal bank may lend to any borrower, under this subsection and any other law or rule, an amount that would result in an aggregate amount for all loans to that borrower that exceeds 20% of the universal bank's capital. A universal bank or its subsidiary may take an equity position or other form of interest as security in a project funded through such loans. Every transaction by a universal bank or its subsidiary under this subsection shall require prior approval by the governing board of the universal bank or its subsidiary, respectively. Such loans are not subject to s. 221.0326 or to classification as losses, for a period of 2 years from the date of each loan except as provided in par. (b).

AB563-engrossed,18,23 (b) Suspension of additional authority. The division may suspend authority established under this subsection and, in such case, may specify how an outstanding loan shall be treated by the universal bank or its subsidiary. Among the factors that the division may consider in suspending authority under this subsection are the universal bank's capital adequacy, asset quality, earnings quantity, earnings quality, adequacy of liquidity and sensitivity to market risk and the ability of the universal bank's management.

AB563-engrossed,19,3 (10) Exercise of loan powers; prohibited considerations. In determining whether to make a loan or extension of credit, no universal bank may consider any health information obtained from the records of an affiliate of the universal bank that is engaged in the business of insurance, unless the person to whom the health information relates consents.

AB563-engrossed,19,11 222.0405 Investment powers. (1) Investment securities. Except as provided in subs. (3) to (8), a universal bank may purchase, sell, underwrite and hold investment securities, consistent with safe and sound banking practices, up to 100% of the universal bank's capital. A universal bank shall not invest greater than 20% of the universal bank's capital in the investment securities of one obligor or issuer. In this subsection, "investment securities" includes commercial paper, banker's acceptances, marketable securities in the form of bonds, notes, debentures and similar instruments that are regarded as investment securities.

AB563-engrossed,19,15 (2) Equity securities. Except as provided in subs. (3) to (8), a universal bank may purchase, sell, underwrite and hold equity securities, consistent with safe and sound banking practices, up to 20% of capital or, if approved by the division in writing, a greater percentage of capital.

AB563-engrossed,20,4 (3) Housing activities. With the prior written consent of the division, a universal bank may invest in the initial purchase and development, or the purchase or commitment to purchase after completion, of home sites and housing for sale or rental, including projects for the reconstruction, rehabilitation or rebuilding of residential properties to meet the minimum standards of health and occupancy prescribed for a local governmental unit, the provision of accommodations for retail stores, shops and other community services that are reasonably incident to that housing, or in the stock of a corporation that owns one or more of those projects and that is wholly owned by one or more financial institutions. The total investment in any one project may not exceed 15% of the universal bank's capital, nor may the aggregate investment under this subsection exceed 50% of capital. A universal bank may not make an investment under this subsection unless it is in compliance with the capital requirements set by the division under s. 222.0305 (1) and with the capital maintenance requirements of its deposit insurance corporation.

AB563-engrossed,20,16 (4) Profit-participation projects. A universal bank may take equity positions in profit-participation projects, including projects funded through loans from the universal bank, in an aggregate amount not to exceed 20% of capital. The division may suspend the investment authority under this subsection. If the division suspends the investment authority under this subsection, the division may specify how outstanding investments under this subsection shall be treated by the universal bank or its subsidiary. Among the factors that the division may consider in suspending authority under this subsection are the universal bank's capital adequacy, asset quality, earnings quantity, earnings quality, adequacy of liquidity and sensitivity to market risk and the ability of the universal bank's management. This subsection does not authorize a universal bank, directly or indirectly through a subsidiary, to engage in the business of underwriting insurance.

AB563-engrossed,20,19 (5) Debt investments. A universal bank may invest in bonds, notes, obligations and liabilities described under s. 222.0403 (3) to (7), subject to the limitations under those subsections.

AB563-engrossed,20,21 (6) Certain liabilities. This section does not limit investment in the liabilities described in s. 222.0403 (8).

AB563-engrossed,20,23 (7) Certain investments. A universal bank may invest without limitation in any of the following:

AB563-engrossed,21,3 (a) Business development corporations. Stocks or obligations of a corporation organized for business development by this state or by the United States or by an agency of this state or the United States.

AB563-engrossed,21,5 (b) Urban renewal investment corporations. Obligations of an urban renewal investment corporation organized under the laws of this state or of the United States.

AB563-engrossed,21,10 (c) Certain bank insurance companies. An equity interest in an insurance company or an insurance holding company organized to provide insurance for universal banks and for persons affiliated with universal banks, solely to the extent that this ownership is a prerequisite to obtaining directors' and officers' insurance or blanket bond insurance for the universal bank through the company.

AB563-engrossed,21,14 (d) Certain remote service unit corporations. Shares of stock, whether purchased or otherwise acquired, in a corporation acquiring, placing and operating remote service units under s. 214.04 (21) or 215.13 (46) or bank communications terminals under s. 221.0303 (2).

AB563-engrossed,21,16 (e) Service corporations. Equity or debt securities or instruments of a service corporation subsidiary of the universal bank.

AB563-engrossed,21,17 (f) Federal funds. Advances of federal funds.

AB563-engrossed,21,21 (g) Certain risk management financial products. With the prior written approval of the division, financial futures transactions, financial options transactions, forward commitments or other financial products for the purpose of reducing, hedging or otherwise managing its interest rate risk exposure.

AB563-engrossed,21,23 (h) Certain fiduciaries. A subsidiary organized to exercise corporate fiduciary powers under ch. 112.

AB563-engrossed,22,2 (i) Agricultural credit corporations. An agricultural credit corporation. Unless a universal bank owns at least 80% of the stock of the agricultural credit corporation, a universal bank may not invest more than 20% of the universal bank's capital in the agricultural credit corporation.

AB563-engrossed,22,5 (j) Deposit accounts and insured obligations. Deposit accounts or insured obligations of any financial institution, the accounts of which are insured by a deposit insurance corporation.

AB563-engrossed,22,11 (k) Certain federal obligations. Obligations of, or obligations that are fully guaranteed by, the United States and stocks or obligations of any federal reserve bank, federal home loan bank, the Student Loan Marketing Association, the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal Deposit Insurance Corporation.

AB563-engrossed,22,12 (L) Other investments. Any other investment authorized by the division.

AB563-engrossed,22,15 (8) Investments in other financial institutions. In addition to the authority granted under ss. 222.0307 and 222.0409, and subject to the limitations of sub. (2), a universal bank may invest in other financial institutions.

AB563-engrossed,22,19 (9) Investments through subsidiaries. A universal bank may make investments under this section, directly or indirectly through a subsidiary, unless the division determines that an investment shall be made through a subsidiary with appropriate safeguards to limit the risk exposure of the universal bank.

AB563-engrossed,22,22 222.0407 Universal bank purchase of its own stock. (1) In general. A universal bank may hold or purchase not more than 10% of its capital stock, notes or debentures, except as provided in sub. (2) or (3).

AB563-engrossed,22,24 (2) Division approval. A universal bank may hold or purchase more than 10% of its capital stock, notes or debentures, if approved by the division.

AB563-engrossed,23,12 (3) Additional authority. A universal bank may hold or purchase more than 10% of its capital stock, notes or debentures if the purchase is necessary to prevent loss upon a debt previously contracted in good faith. Stock, notes or debentures held or purchased under this subsection may not be held by the universal bank for more than 6 months if the stock, notes or debentures can be sold for the amount of the claim of the universal bank against the holder of the debt previously contracted. The universal bank shall either sell the stock, notes or debentures within 12 months of acquisition under this subsection or shall cancel the stock, notes or debentures. Cancellation of the stock, notes or debentures reduces the amount of the universal bank's capital stock, notes or debentures. If the reduction reduces the universal bank's capital below the minimum level required by the division, the universal bank shall increase its capital to the amount required by the division.

AB563-engrossed,23,18 (4) Loans secured by capital, surplus or deposits. A universal bank may not loan any part of its capital, surplus or deposits on its own capital stock, notes or debentures as collateral security, except that a universal bank may make a loan secured by its own capital stock, notes or debentures to the same extent that the universal bank may make a loan secured by the capital stock, notes and debentures of a holding company for the universal bank.

AB563-engrossed,23,23 222.0409 Stock in bank-owned banks. With the approval of the division, a universal bank may acquire and hold stock in one or more banks chartered under s. 221.1202 or national banks chartered under 12 USC 27 (b) or in one or more holding companies wholly owning such a bank. Aggregate investments under this section may not exceed 10% of the universal bank's capital.

AB563-engrossed,24,3 222.0411 General deposit powers. (1) In general. A universal bank may set eligibility requirements for, and establish the types and terms of, deposits that the universal bank solicits and accepts. The terms set under this subsection may include minimum and maximum amounts that the universal bank may accept and the frequency and computation method of paying interest.

AB563-engrossed,24,6 (2) Pledge of security for deposits. Subject to the limitations of s. 221.0324 that are applicable to banks, a universal bank may pledge its assets as security for deposits.

AB563-engrossed,24,9 (3) Securitization of assets. With the approval of the division, a universal bank may securitize its assets for sale to the public. The division may establish procedures governing the exercise of authority granted under this subsection.

AB563-engrossed,24,23 (4) Safe deposit powers. A universal bank may take and receive, from any individual or corporation for safekeeping and storage, gold and silver plate, jewelry, money, stocks, securities, and other valuables or personal property; and rent out the use of safes or other receptacles upon its premises upon such compensation as may be agreed upon. A universal bank has a lien for its charges on any property taken or received by it for safekeeping. If the lien is not paid within 2 years from the date the lien accrues, or if property is not called for by the person depositing the property, or by his or her representative or assignee, within 2 years from the date the lien accrues, the universal bank may sell the property at public auction. A universal bank shall provide the same notice for a sale under this subsection that is required by law for sales of personal property on execution. After retaining from the proceeds of the sale all of the liens and charges due the bank and the reasonable expenses of the sale, the universal bank shall pay the balance to the person depositing the property, or to his or her representative or assignee.

AB563-engrossed,25,3 222.0413 Other service and incidental activity powers. (1) Necessary or convenient powers. Unless otherwise prohibited or limited by this chapter, a universal bank may exercise all powers necessary or convenient to effect the purposes for which the universal bank is organized or to further the businesses in which the universal bank is lawfully engaged.

AB563-engrossed,25,13 (2) Reasonably related powers. (a) Subject to any applicable state or federal regulatory or licensing requirements, a universal bank may engage, directly or indirectly through a subsidiary, in activities reasonably related or incident to the purposes of the universal bank. Activities reasonably related or incident to the purposes of the universal bank are those activities that are part of the business of financial institutions, or closely related to the business of financial institutions, or convenient and useful to the business of financial institutions, or reasonably related or incident to the operation of financial institutions or are financial in nature. Activities that are reasonably related or incident to the purposes of a universal bank include the following:

AB563-engrossed,25,14 1. Business and professional services.

AB563-engrossed,25,15 2. Data processing.

AB563-engrossed,25,16 3. Courier and messenger services.

AB563-engrossed,25,17 4. Credit-related activities.

AB563-engrossed,25,18 5. Consumer services.

AB563-engrossed,25,19 6. Real estate-related services, including real estate brokerage services.

AB563-engrossed,25,20 7. Insurance and related services, other than insurance underwriting.

AB563-engrossed,25,21 8. Securities brokerage.

AB563-engrossed,25,22 9. Investment advice.

AB563-engrossed,25,23 10. Securities and bond underwriting.

AB563-engrossed,25,24 11. Mutual fund activities.

AB563-engrossed,25,25 12. Financial consulting.

AB563-engrossed,26,1 13. Tax planning and preparation.

AB563-engrossed,26,2 14. Community development and charitable activities.

AB563-engrossed,26,3 15. Debt cancellation contracts.

AB563-engrossed,26,5 16. Any activities that are reasonably related or incident to activities under subds. 1. to 15., as determined by rule of the division under par. (b).

AB563-engrossed,26,15 (b) An activity that is authorized by statute or regulation for financial institutions to engage in as of the effective date of this paragraph .... [revisor inserts date], is an activity that is reasonably related to or incident to the purposes of a universal bank. An activity permitted under the Bank Holding Company Act is an activity that is reasonably related to or incident to the purposes of a universal bank. The division may, by rule, expand the list of activities under par. (a) 1. to 15. that are reasonably related or incident to the purposes of a universal bank and, by rule, may establish which activities are reasonably related or incident to the activities under par. (a) 1. to 15. Any activity approved by rule of the division under this paragraph shall be authorized for all universal banks.

AB563-engrossed,26,18 (3) Notice requirement. A universal bank shall give 60 days' prior written notice to the division of the universal bank's intention to engage in an activity under this section.

AB563-engrossed,27,2 (4) Standards for denial. The division may deny the authority of a universal bank to engage in an activity under this section, other than those activities described in sub. (2) (a) 1. to 15., if the division determines that the activity is not an activity reasonably related or incident to the purposes of a universal bank. The division may deny the authority of a universal bank to engage in an activity under this section if the division determines that the universal bank is not well-capitalized, that the universal bank is the subject of an enforcement action or that the universal bank does not have satisfactory management expertise for the proposed activity.

AB563-engrossed,27,6 (5) Insurance intermediation. A universal bank, or an officer or salaried employe of a universal bank, may obtain a license as an insurance intermediary, if otherwise qualified. A universal bank may not, directly or indirectly through a subsidiary, engage in the business of underwriting insurance.

AB563-engrossed,27,8 (6) Other activities approved by the division. A universal bank may engage in any other activity that is approved by rule of the division.

AB563-engrossed,27,12 (7) Activities provided through a subsidiary. A universal bank may engage in an activity under this section, directly or indirectly through a subsidiary, unless the division determines that the activity must be conducted through a subsidiary with appropriate safeguards to limit the risk exposure of the universal bank.

AB563-engrossed,27,18 (8) Limitations on investments through subsidiaries. The amount of the investment in any one subsidiary that engages in an activity under this section may not exceed 20% of capital or, if approved by the division, a higher percentage authorized by the division. The aggregate investment in all subsidiaries that engage in an activity under this subsection may not exceed 50% of capital or, if approved by the division, a higher percentage authorized by the division.

AB563-engrossed,27,21 (9) Ownership of subsidiaries. A subsidiary that engages in an activity under this section may be owned jointly, with one or more other financial institutions, individuals or entities.

AB563-engrossed,27,23 222.0415 Trust powers. Subject to rules of the division, a universal bank may exercise trust powers in accordance with s. 221.0316.

AB563-engrossed, s. 2t Section 2t. 227.245 of the statutes is created to read:

AB563-engrossed,28,4 227.245 Permanent rules; exemptions. (1) Promulgation of universal banking rules. Except as provided in subs. (2) and (3), the division of banking may promulgate a rule under s. 222.0413 (2) (b) without complying with the notice, hearing and publication procedures under this chapter.

AB563-engrossed,28,10 (2) Filing and publication. The division of banking shall file a rule described under sub. (1) as provided in s. 227.20. At the time that the rule is filed, the division of banking shall mail a copy of the rule to the chief clerk of each house and to each member of the legislature, shall publish in the official state newspaper a class 1 notice under ch. 985 containing a copy of the rule and shall take any other step it considers feasible to make the rule known to persons who will be affected by the rule.

AB563-engrossed,28,12 (3) Effective date. A rule described under sub. (1) takes effect as provided under s. 227.22.

AB563-engrossed, s. 3 Section 3. Nonstatutory provisions.

AB563-engrossed,28,23 (1) Except as otherwise provided in this subsection, using the procedure under section 227.24 of the statutes, the division of banking may promulgate rules authorized under chapter 222 of the statutes, as created by this act, for the period before permanent rules become effective, but not to exceed the period authorized under section 227.24 (1) (c) and (2) of the statutes. Notwithstanding section 227.24 (1) (a) and (2) (b) of the statutes, the division of banking need not provide evidence of the necessity of preservation of the public peace, health, safety or welfare in promulgating rules under this subsection. This subsection does not apply to the promulgation of rules under section 222.0413 (2) (b) of the statutes, as created by this act.

AB563-engrossed, s. 4m Section 4m.0 Effective dates. This act takes effect on the first day of the 3rd month beginning after publication, except as follows:

AB563-engrossed,29,2 (1) The treatment of sections 222.0413 (2) (b) and 227.245 of the statutes and Section 3 of this act take effect on the day after publication.

AB563-engrossed,29,3 (End)