SB451: Bill Text

LRB-2991/1

ARG:emw

2021 - 2022 LEGISLATURE

2021 Senate BILL 451

July 7, 2021 - Introduced by Senators Stafsholt, Bewley, Carpenter, Jacque, Ringhand and Wirch, cosponsored by Representatives Murphy, Baldeh, Callahan, Edming, Goyke, Krug, Kuglitsch, Loudenbeck, Rozar, Subeck, Tittl, Tusler and Wittke. Referred to Committee on Financial Institutions and Revenue.

SB451,1,9 An Act to repeal 186.235 (21); to renumber and amend 186.11 (2); to amend 186.07 (7), 186.098 (1), 186.113 (15) (a), 186.115 (2), 186.118 (1), 186.118 (3) (a) (intro.), 186.118 (4), 186.118 (5), 186.235 (14) (c), 214.04 (21) (b), 215.13 (46) (a) 1., 221.0303 (2), 227.10 (2m), 227.14 (2) (a) 8., 227.20 (3) (c), 227.24 (1) (b) and 227.24 (1) (d); and to create 186.11 (2) (b) and (c), 186.113 (26), 186.118 (3m) and 227.01 (13) (yu) of the statutes; relating to: authorized activities and operations of credit unions, automated teller machines of financial institutions, repealing rules promulgated by the Department of Financial Institutions, and providing an exemption from rule-making procedures.

Analysis by the Legislative Reference Bureau

This bill makes various changes related to the authorized activities and operations of credit unions. The bill also repeals certain administrative rules related to the placement or operation of automated teller machines (ATMs) by financial institutions.

Under current law, the Office of Credit Unions (OCU) in the Department of Financial Institutions regulates credit unions in this state. Current law specifies various authorized activities and powers of credit unions.

Parity with federally chartered credit unions

Current law includes the following provisions relating to parity between federally chartered and state-chartered credit unions:

1. 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. In making this determination, OCU must consider specified factors and, 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. An OCU rule that includes an activity or power in the list is exempt from most administrative rule-making requirements, but deleting an activity or power from the list or modifying the activity or power on the list requires OCU to go through the normal rule-making process.

2. A credit union may undertake any activity, exercise any power, or offer any financially related product or service that any other provider of financial products or services may undertake, exercise, or provide or that OCU finds to be financially related if OCU has specified, by rule, the activity, power, product, or service as one that may be undertaken, exercised, or offered by a credit union.

3. OCU may, by rule, authorize credit unions to exercise any power under the notice, disclosure, or procedural requirements governing federally chartered credit unions or to make any loan or investment or exercise any right, power, or privilege of federally chartered credit unions permitted under federal law if the Credit Union Review Board approves. Such a rule may not restrict powers granted to credit unions or affect provisions of the Wisconsin Consumer Act.

The bill makes the following changes to these provisions: 1) with respect to item 1., above, 30 days after an activity or power becomes authorized for federally chartered credit unions, the activity or power also becomes authorized for Wisconsin-chartered credit unions unless otherwise noted by an OCU general order within this 30-day period; 2) with respect to item 2., above, OCU specifies the activity, power, product, or service that may be undertaken, exercised, or offered by a credit union by OCU guidance, not OCU rule; and 3) item 3., above, is repealed.

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.

Off-site ATMs

Under current law, a bank, savings bank, savings and loan 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 OCU and the division, a financial institution must provide advance written notice to OCU or 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.

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.

Nonmember loan participation

Under current law, a credit union may make loans to members upon terms approved by the credit committee, loan officer, or board of directors.

The bill specifies that a credit union may allow nonmember loan participation as a joint applicant, co-obligor, cosigner, co-borrower, surety, or guarantor.

Supplemental capital

The bill specifies that credit unions may issue or offer supplemental forms of capital approved by OCU.

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.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB451,1 Section 1. 186.07 (7) of the statutes is amended to read:

SB451,4,5 186.07 (7) Vacancies. Within 60 90 days after the date of a removal vacancy on the board of directors, the board of directors shall appoint a director to fill the vacancy. The appointee shall serve until a successor is elected at the next annual membership meeting.

SB451,2 Section 2. 186.098 (1) of the statutes is amended to read:

SB451,4,11 186.098 (1) Loan approval. The credit union may make loans to members upon terms approved by the credit committee, loan officer, or board of directors. The credit union may also permit a nonmember to participate in an obligation or extension of credit to a member as a joint applicant, co-obligor, cosigner, co-borrower, surety, or guarantor.

SB451,3 Section 3. 186.11 (2) of the statutes is renumbered 186.11 (2) (a) and amended to read:

SB451,4,15 186.11 (2) (a) A Subject to pars. (b) and (c), a credit union may purchase, hold, and dispose of property as necessary for or incidental to its operations.

SB451,4 Section 4. 186.11 (2) (b) and (c) of the statutes are created to read:

SB451,4,18 186.11 (2) (b) Subject to guidance issued by the office of credit unions, a credit union may purchase, lease, hold, and convey the following types of real estate:

SB451,4,20 1. Real estate conveyed to the credit union in satisfaction of debts previously contracted in the course of the credit union's business.

SB451,4,23 2. Real estate purchased at sale on judgments, decrees, or mortgage foreclosures under securities held by the credit union, but a credit union may not bid at a sale a larger amount than is necessary to satisfy its debts and costs.

SB451,4,25 3. Subject to the approval of the office of credit unions, real estate acquired or held by the credit union for any other purpose.

SB451,5,2 (c) Real estate acquired under par. (b) may not be held for more than 5 years, unless an extension is granted by the office of credit unions.

SB451,5 Section 5. 186.113 (15) (a) of the statutes is amended to read:

SB451,5,21 186.113 (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. 221.0303 (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.

SB451,6 Section 6 . 186.113 (26) of the statutes is created to read:

SB451,5,25 186.113 (26) Supplemental capital. Issue or otherwise offer supplemental forms of capital in such form and with such conditions as are approved by the office of credit unions.

SB451,7 Section 7. 186.115 (2) of the statutes is amended to read:

SB451,6,9 186.115 (2) Rules Guidance. The activities, powers, products, and services that may be undertaken, exercised, or offered by credit unions under sub. (1) are limited to those specified by rule of guidance issued by the office of credit unions. The office of credit unions may direct any credit union to cease any activity, the exercise of any power, or the offering of any product or service authorized by rule this guidance. Among the factors that the office of credit unions may consider in so directing a credit union are the credit union's net worth, assets, management rating, and liquidity ratio and its ratio of net worth to assets.

SB451,8 Section 8 . 186.118 (1) of the statutes is amended to read:

SB451,6,14 186.118 (1) In addition to any activity or power authorized under ss. 186.098, 186.11, 186.113, 186.114, and 186.115, and 186.235 (21), a credit union organized under s. 186.02 may engage in any activity or exercise any power that is listed by the office of credit unions under sub. (2) (a) or, (3) (b) 1., or (3m) (b) 1.

SB451,9 Section 9 . 186.118 (3) (a) (intro.) of the statutes is amended to read:

SB451,6,23 186.118 (3) (a) (intro.) After April 18, 2014, and before the effective date of this paragraph .... [LRB inserts date], if any activity or power incidental to the business of a credit union that is not listed under sub. (2) (a) becomes authorized for federally chartered credit unions, within 30 days after the activity or power becomes authorized the office of credit unions shall make a determination as to whether the activity or power should also be authorized for credit unions organized under s. 186.02. In making this determination, the office of credit unions shall consider the degree to which the following apply with respect to the activity or power:

SB451,10 Section 10 . 186.118 (3m) of the statutes is created to read:

SB451,7,9 186.118 (3m) (a) On or after the effective date of this paragraph .... [LRB inserts date], if any activity or power incidental to the business of a credit union that is not listed under sub. (2) (a) or (3) (b) 1. becomes authorized for federally chartered credit unions, 30 days after the activity or power becomes authorized the activity or power shall also be authorized for credit unions organized under s. 186.02 unless otherwise noted by general order of the office of credit unions within this 30-day period. In making the determination whether to issue such a general order, the office of credit unions shall consider the degree to which the following apply with respect to the activity or power:

SB451,7,11 1. It is necessary, convenient, or useful for effectively carrying out the mission or business of a credit union.

SB451,7,13 2. It is the functional equivalent or logical outgrowth of activities or powers that are part of the mission or business of a credit union.

SB451,7,16 3. It involves risks similar in nature to those already assumed as part of the business of the credit union and it is not likely to be detrimental to the overall safety and soundness of the credit union.

SB451,7,20 (b) 1. The office of credit unions shall promulgate a rule adding an activity or power to the list of activities and powers established under subs. (2) (a) and (3) (b) 1. unless the office of credit unions has issued a general order otherwise as provided in par. (a).

SB451,7,24 2. The office of credit unions shall submit the proposed rule under subd. 1. to the legislative reference bureau in an electronic format approved by the legislative reference bureau, and the legislative reference bureau shall publish the proposed rule in the notice section of the Wisconsin administrative register under s. 35.93.

SB451,8,6 3. Sections 227.114 (4) and (6), 227.115, 227.135, 227.137, 227.14 (2) (a) 6., (2g), (4), and (4m), 227.15, 227.16, 227.17, 227.18, 227.185, 227.19, and 227.30 do not apply to the office of credit unions in promulgating a rule under subd. 1. or to any rule promulgated by the office of credit unions under subd. 1. Guidelines prescribed by executive order of the governor do not apply to the office of credit unions in promulgating a rule under subd. 1.

SB451,11 Section 11 . 186.118 (4) of the statutes is amended to read:

SB451,8,10 186.118 (4) The office of credit unions shall publish and maintain on the department of financial institutions' Internet site the list of activities and powers under sub. subs. (2) (a), (3) (b) 1., and (3m) (b) 1.

SB451,12 Section 12 . 186.118 (5) of the statutes is amended to read:

SB451,8,15 186.118 (5) If the office of credit unions promulgates a rule listing an activity or power as provided in sub. (2) (a) or, (3) (b) 1., or (3m) (b) 1., subs. (2) (b) and (c) and, (3) (b) 2. and 3., and (3m) (b) 2. and 3. do not apply to any subsequent rule modifying or eliminating the listed activity or power.