December 8, 2023 - Introduced by Senators Stafsholt, Cabral-Guevara, Felzkowski, Marklein and Taylor, cosponsored by Representatives Katsma, Murphy, O’Connor, Allen, Behnke, Dittrich, Goeben, Gundrum, Novak, Penterman and Rettinger. Referred to Committee on Financial Institutions and Sporting Heritage.
SB773,,22An Act to repeal 138.052 (7e) and (7m), 138.056 (6) and 215.21 (2); to renumber and amend 186.11 (2); to amend 34.08 (2), 38.20 (2) (e), 67.12 (12) (a), 138.052 (12) (a), 186.07 (7), 186.113 (15) (a), 186.118 (3) (a) (intro.), 186.235 (14) (c), 214.04 (21) (b), 215.13 (39), 215.13 (46) (a) 1., 215.21 (15), 221.0303 (2), 941.38 (1) (b) 21., 946.82 (4) and 969.08 (10) (b); and to create 186.11 (2) (b) and (c), 186.113 (26), 227.01 (13) (yu) and 943.825 of the statutes; relating to: authorized activities and operations of credit unions; the lending area of savings and loan associations; automated teller machines; residential mortgage loans and variable rate loans; payments for public deposit losses in failed financial institutions; promissory notes of certain public bodies; repealing rules promulgated by the Department of Financial Institutions; providing an exemption from rule-making procedures; and providing a penalty. SB773,,33Analysis by the Legislative Reference Bureau Under current law, the Office of Credit Unions (OCU) in the Department of Financial Institutions (DFI) regulates state-chartered credit unions, and DFI’s Division of Banking (division) regulates state-chartered banks, savings banks, and savings and loan (S&L) associations. Current law specifies various authorized activities and powers of these financial institutions.
This bill does the following with respect to the authorized operations of financial institutions:
1. Expands the ability of a credit union to purchase, lease, and sell real property, subject to limitations.
2. Specifies that credit unions may issue or offer supplemental forms of capital approved by OCU.
3. Repeals certain DFI rules related to the placement or operation of automated teller machines (ATMs) by financial institutions.
4. Creates the crime of interfering with an ATM.
5. Eliminates a geographical lending restriction for an S&L association.
6. Eliminates certain lender disclosure requirements applicable to residential mortgage loans and variable rate loans.
7. Extends the maximum maturity date, from 10 to 20 years, of a promissory note issued by a municipality, county, or school district.
8. Extends the period in which a credit union’s board of directors must appoint a director to fill a board vacancy.
9. Increases the amount of compensation available from DFI for losses resulting from the deposit of public moneys in a failed financial institution.
10. Extends the period during which OCU must determine whether an activity or power that becomes authorized for a federally chartered credit union should also be authorized for a Wisconsin-chartered credit union.
11. Extends the deadline for a credit union to pay OCU for the cost of an OCU examination.
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.
Supplemental capital
The bill specifies that credit unions may issue or offer supplemental forms of capital in the form and with the conditions, including those related to the safety and soundness of the proposed use of the capital and the overall condition of the credit union, approved by OCU.
Off-site ATMs
Under current law, a bank, savings bank, S&L 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 the division, a financial institution other than a credit union must provide advance written notice to 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.
Interference with automated teller machines
The bill also creates a Class H felony for intentionally causing impairment or interruption of use of a financial institution’s ATM or customer bank communications terminal. A Class H felony is punishable by a fine not exceeding $10,000 or imprisonment not exceeding six years, or both.
Savings and loan association lending areas
Current law specifies the authority of an S&L association to make mortgage loans but also limits the lending area of an S&L association to a radius of 100 miles of the S&L association’s home office. In general, an S&L association may establish branch offices within the lending area of its home office.
The bill eliminates the lending-area restriction on an S&L association and, consequently, the limitation that a branch office must be located within the lending area.
Residential mortgage loans and variable rate loans
Under current law, a residential mortgage loan generally is a loan secured by a first lien real estate mortgage on a one-family to four-family dwelling that the borrower uses as his or her principal residence. Current law imposes various requirements related to residential mortgage loans, including the following:
1. Before a lender accepts an application or fee in connection with a residential mortgage loan, the lender must deliver to the potential loan applicant a written disclosure that contains certain information, including whether an application fee is refundable and whether the interest rate and other terms of the agreement may change before the closing date.
2. The lender must provide a written statement to an applicant of the reasons for adverse action on an application. Delivery of a notice of adverse action in compliance with federal law satisfies this requirement.
3. The lender must provide written notice to the borrower if the loan servicing for the residential mortgage loan is sold. The notice must include the name, address, and telephone number of the new loan servicer.
The bill repeals the requirements identified as 1. to 3. immediately above.
Under current law, a variable rate loan generally is a residential mortgage loan the terms of which permit the interest rate to be increased or decreased. Current law imposes various requirements related to variable rate loans, including a disclosure requirement. Before making a variable rate loan, the lender must disclose specified information to at least one of the borrowers, including that the loan contract contains a variable interest rate provision; identification of the index used and its current base; and rights of the borrower with respect to a change in the interest rate.
The bill repeals these disclosure requirements.
Promissory notes of certain public bodies
Under current law, a public body that has the authority to borrow money and issue obligations to repay the money out of public funds or revenues and that has the authority to levy a tax may issue promissory notes for any public purpose. Public bodies covered by this provision include cities, villages, towns, counties, and school districts. Each promissory note, with several exceptions, must be repaid within 10 years after the original date of the note. Under the bill, each promissory note must be repaid within 20 years after the original date of the note.
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.
Public deposit losses
Under current law, the Investment Board (SWIB) and the governing bodies of counties, municipalities, and certain other local governmental units (collectively, public depositors) must designate one or more financial institutions in this state for deposit of all public moneys received by the public depositor. DFI administers a claims process that repays public depositors for losses that exceed applicable deposit insurance resulting from a failed or failing financial institution’s failure to repay the deposit of public moneys. The maximum payment that DFI can make to a public depositor for losses from a single financial institution is $400,000. These loss payment provisions also apply to local government deposits in the local government pooled-investment fund managed by SWIB.
The bill increases, from $400,000 to $1,000,000, the maximum payment that DFI can make to a public depositor for losses from a single financial institution that exceed deposit insurance.
Parity with federally chartered credit unions
Current law includes certain provisions relating to parity between federally chartered and state-chartered credit unions. Under one of these provisions, 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. 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.
The bill extends, from 30 days to 60 days, the period during which OCU must determine whether an additional activity or power authorized for federally chartered credit unions should also be authorized for Wisconsin-chartered credit unions.
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.
Because this bill creates a new crime or revises a penalty for an existing crime, the Joint Review Committee on Criminal Penalties may be requested to prepare a report.
For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.
SB773,,44The people of the state of Wisconsin, represented in senate and assembly, do enact as follows: SB773,15Section 1. 34.08 (2) of the statutes is amended to read: SB773,,6634.08 (2) Payments under sub. (1) shall be made in the order in which satisfactory proofs of loss are received by the division of banking. The payment made to any public depositor for all losses of the public depositor in any individual public depository may not exceed $400,000 $1,000,000 above the amount of deposit insurance provided by an agency of the United States at the public depository that experienced the loss. Upon a satisfactory proof of loss, the division of banking shall direct the department of administration to draw its warrant payable from the appropriation under s. 20.144 (1) (a) and the secretary of administration shall pay the warrant under s. 16.401 (4) in favor of the public depositor that has submitted the proof of loss. SB773,27Section 2. 38.20 (2) (e) of the statutes is amended to read: SB773,,8838.20 (2) (e) The district purchasing property under this subsection may, with approval of the city council or village board involved, pay the purchase price by issuing and delivering directly to the city or village the general obligation promissory notes or the notes of the district under s. 67.12 (12), except that no referendum may be held and the 10-year 20-year limitation on such notes shall be inapplicable to such notes issued under this paragraph. Such notes shall mature and be payable at such times, in such amounts and at such rate of interest as will amortize and pay when due the principal and interest on the outstanding obligations of the city or village for technical college purposes. All such notes, upon execution and delivery to the city or village, shall in all respects be held and considered as an authorized investment under s. 66.0603 (1m) or 67.11 (2) and (3) of the debt service fund created for payment of the city or village obligations issued for technical college purposes and shall be offset against city or village indebtedness in computing legal debt limit to the same extent as other authorized investments of the debt service fund and such notes may be sold and hypothecated. If the offset against city or village indebtedness under this paragraph is determined to be invalid in any respect, such city or village immediately may require the district issuing the promissory notes to such city or village to comply with pars. (c) and (d) to the extent necessary to cure such invalidity. SB773,,101067.12 (12) (a) Any municipality may issue promissory notes as evidence of indebtedness for any public purpose, as defined in s. 67.04 (1) (b), including but not limited to paying any general and current municipal expense, and refunding any municipal obligations, including interest on them. Each note, plus interest if any, shall be repaid within 10 years after the original date of the note, except that notes issued under this section for purposes of ss. 119.498, 281.58, 281.59, 281.61, and 292.72 and s. 281.60, 2021 stats., issued to raise funds to pay a portion of the capital costs of a metropolitan sewerage district, or issued by a 1st class city or a county having a population of 750,000 or more, to pay unfunded prior service liability with respect to an employee retirement system, shall be repaid within 20 years after the original date of the note. SB773,411Section 4. 138.052 (7e) and (7m) of the statutes are repealed. SB773,512Section 5. 138.052 (12) (a) of the statutes is amended to read: SB773,,1313138.052 (12) (a) Any lender violating sub. (2) (b), (5), (5m) (b) 1., (6), (7), (7e), (7m) or (7s), or an escrow agent, as defined in sub. (5m) (a), violating sub. (5m) (b) 2., is liable to the borrower for $500 plus actual damages, costs and reasonable attorney fees. SB773,614Section 6. 138.056 (6) of the statutes is repealed. SB773,715Section 7. 186.07 (7) of the statutes is amended to read: SB773,,1616186.07 (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. SB773,817Section 8. 186.11 (2) of the statutes is renumbered 186.11 (2) (a) and amended to read: SB773,,1818186.11 (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. SB773,919Section 9. 186.11 (2) (b) and (c) of the statutes are created to read: SB773,,2020186.11 (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: SB773,,21211. Real estate conveyed to the credit union in satisfaction of debts previously contracted in the course of the credit union’s business. SB773,,22222. 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. SB773,,23233. Subject to the approval of the office of credit unions, real estate acquired or held by the credit union for any other purpose. SB773,,2424(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. SB773,1025Section 10. 186.113 (15) (a) of the statutes is amended to read: SB773,,2626186.113 (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. SB773,1127Section 11. 186.113 (26) of the statutes is created to read: SB773,,2828186.113 (26) Supplemental capital. In addition to the rights of credit unions under other law, issue or otherwise offer supplemental forms of capital in the form and with the conditions, including those related to the safety and soundness of the proposed use of the capital and the overall condition of the credit union, approved by the office of credit unions. This approval shall be in writing and obtained prior to the issuance of the supplemental capital. SB773,1229Section 12. 186.118 (3) (a) (intro.) of the statutes is amended to read: SB773,,3030186.118 (3) (a) (intro.) After April 18, 2014, 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 60 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: SB773,1331Section 13. 186.235 (14) (c) of the statutes is amended to read:
