This is the preview version of the Wisconsin State Legislature site.
Please see http://docs.legis.wisconsin.gov for the production version.
PROPOSED ORDER OF THE OFFICE OF CREDIT UNIONS
REPEALING AND RECREATING RULES
The Wisconsin Office of Credit Unions proposes an order to repeal and recreate ch. DFI—CU 72 relating to commercial and member business loans.
The scope statement for this rule, SS 108-16, was approved by the governor on November 8, 2016, published in Register No. 731A2 on November 14, 2016, approved by the director of the office of credit unions on November 30, 2016, and approved by the credit union review board on June 19, 2017.
______________________________________________________________________________
ANALYSIS
1.   Statutes interpreted:  
Sections 186.098 and 186.115, Stats.
2.   Statutory Authority:
Sections 186.098(10), 186.115(2) and 186.235(8), Stats.
3.   Explanation of agency authority:
Section 186.098(10), Stats., provides: “Loans to members secured by mortgages on real estate may be made subject to the rules prescribed by the office of credit unions.”
Section 186.115(2), Stats., provides: “The activities, powers, products and services that may be undertaken, exercised or offered by credit unions … are limited to those specified by rule of the office of credit unions.”
Section 186.235(8), Stats., provides: “The office of credit unions shall, with the approval of the credit union review board, promulgate rules relating to the business of credit unions.”
4.   Related statutes or rules:
Section 186.098 authorizes a credit union to make loans to members.
Ch. DFI—CU 72, Admin. Code, sets forth requirements for a credit union to make member business loans.
5.   Plain language analysis:
The proposed rule repeals and recreates ch. DFI-CU 72, Admin. Code, to reflect changes effective January 1, 2017 to the National Credit Union Administration’s (NCUA’s) member business loans and commercial lending rules, 12 C.F.R. Part 723. Prior to the revision, ch. DFI-CU 72 and 12 C.F.R. Part 723 were substantially similar. The proposed rule updates Wisconsin’s rules to reflect revisions to its federal counterpart. Proposed changes strengthen a credit union’s board of directors and management responsibilities; replace current loan-to-value requirements and portfolio limits with a risk-based approach; modify waiver requirements and processes for obtaining waivers; and calculate the member business loan cap as a multiple of net worth, and not as a percentage of assets.
6.   Summary of, and comparison with, existing or proposed federal regulation:
Existing federal regulations are contained in 12 C.F.R. Part 723. The federal rule applies to federally-chartered credit unions and to state-chartered credit unions in states that have adopted the federal rule. Wisconsin is one of seven states that have a state-specific rule. The other states are: Connecticut, Illinois, Maryland, Oregon, Texas and Washington. The proposed rule would revise Wisconsin’s state-specific rule to reflect the recently revised federal rule. Provisions from revised 12 C.F.R. Part 723 that the office of credit unions seeks to incorporate into the repealed and recreated ch. DFI—CU 72 are as follows: policy and program responsibilities that a state-chartered credit union must adopt and implement as part of a safe and sound commercial lending program; a statutory limit on the aggregate amount of member business loans that a state-chartered credit union may make pursuant to 12 U.S.C. 1757a; the removal of prescriptive requirements and limitations – such as collateral and security requirements, equity requirements, and loan limits – to be replaced with a broad principles-based regulatory approach; and the elimination of a several waiver processes.
7.   Comparison with rules in adjacent states:
Only Illinois has a comparable rule: Ill. Admin. Code title 38, s. 190.165. This rule gives Illinois state-chartered credit unions the authority to make business loans to members. Illinois has recently adopted a rule to revise this rule to reflect the recent revisions to 12 C.F.R. Part 723. Minnesota, Iowa and Michigan follow revised 12 C.F.R. Part 723 and have not adopted a comparable state-specific rule.
8.   Summary of factual data and analytical methodologies:
The office of credit unions reviewed the revisions to 12 C.F.R. Part 723. Proposed changes to ch. DFI—CU 72 are based on these revisions as well as staff regulatory experience.
9.   Analysis and supporting documents used to determine effect on small business:
Small credit unions will not be impacted by the proposed rule. Only 27 out of the 143 Wisconsin federally insured state chartered credit unions fall within the definition of a small business under s. 227.114(1), Stats. Typically these credit unions do not engage in the commercial lending anticipated by the proposed rule. Proposed requirements regarding a board of directors’ management responsibilities and having a commercial loan policy in place are minimal and should have little to no additional cost. (Note: the department used “assets” in lieu of “gross annual sales” as the closest approximation to determine the effect on small business under s. 227.114(1), Stats., because credit unions do not have gross annual sales.)
10.   Anticipated costs incurred by private sector:
The office of credit unions does not anticipate any costs will be incurred by the private sector.
11.   Effect on small business:
Loading...
Loading...
Links to Admin. Code and Statutes in this Register are to current versions, which may not be the version that was referred to in the original published document.