Comments may be submitted to the contact person shown below no later than the date on which the public hearing on this proposed rule order is conducted. Information as to the place, date and time of the public hearing will be published in the Wisconsin Administrative Register. The comment period ended on September 28, 2023.
By mail: Marc Shovers, Assistant Chief Legal Counsel, Department of Financial Institutions, PO Box 8861, Madison, WI 53708-8861.
The Comment Period ended on the date of the public hearing, September 28th, 2023.
Rule Text
SECTION 1. DFI-Bkg 3.01 and 3.02 are repealed.
SECTION 2. DFI-Bkg 3.03 (intro.) and (1) are amended to read:
DFI-Bkg 3.03 (intro.) As part of its banking business and incidental thereto, a bank may collect, transcribe, process, analyze, and store, for itself and others, banking, financial, or related economic data. In addition, incidental to its banking business, a bank may do all of the following:
(1) Market a by-product (such as program or output) of a data processing activity described in this rule; and.
SECTION 3. DFI-Bkg 3.04 (5) is amended to read:
DFI-Bkg 3.04 (5) Unless otherwise provided by banking laws or regulations, pertinent book figures of the parent bank and its operating subsidiaries, except agricultural credit corporations, shall be consolidated for the purpose of applying applicable statutory limitations, including but not limited to s. 221.0319, 221.0320, 221.0324 or 221.0328, Stats. SECTION 4. DFI-Bkg 3.05 (1) (b) (intro.), 1., and 2., (c) (intro.) and 1. to 4., (d) (intro.) and 1., (e) (intro.) and 1., (f) (intro.) and 1., (g), (2) (a) (intro.) and 1., (3) (a) (intro.), 1., and 2., and (b) and are amended to read:
DFI-Bkg 3.05 (1) (b) (intro.) A bank may enter into a lease financing transaction only if it can reasonably expect to realize a return of its full investment in the leased property, plus the estimated cost of financing the property over the term of the lease from all of the following:
1. Rental;.
2. Estimated tax benefits; and.
(c) (intro.) "Net lease" means a lease under which the bank will not, directly or indirectly, provide or be obligated to provide for any of the following:
1. The servicing, repair or maintenance of the leased property during the lease term;.
2. The purchasing of parts and accessories for the leased property. However, improvements and additions to the leased property may be leased to the lessee upon its request in accordance with any applicable requirements for maximum estimated residual value;.
3. The loan of replacement or substitute property while the leased property is being serviced;.
4. The purchasing of insurance for the lessee, except where the lessee has failed in its contractual obligation to purchase or maintain the required insurance; or.
(d) (intro.) If, in good faith, a bank determines that there has been an unanticipated change in conditions which threatens its financial position by significantly increasing its exposure to loss, the bank may do any of the following:
1. As the owner and lessor under a net lease or a net, full-payout lease, take reasonable and appropriate action to salvage or protect the value of the property or its interests arising under the lease; or.
(e) (intro.) The limitations contained in par. (c) do not prohibit a bank from doing any of the following: 1. Including any provisions in a lease, or from making any additional agreements, to protect its financial position or investment in the circumstances set forth in par. (d);or . (f) (intro.) A bank may acquire specific property to be leased only after the bank has entered into either one of the following:
1. A legally binding written agreement which indemnifies the bank against loss in connection with its acquisition of the property; or.
(g) At the expiration of the a lease, including any renewal or extensions with the same lessee, or in the event of a default on a lease agreement prior to the expiration of the lease term, all of the bank's interest in the property shall either be liquidated or re-leased in conformance with this subsection and either sub. (2) or (3), as soon as practicable, but in no event later than 2 years from the expiration of the lease. Property which the bank retains in anticipation of re-lease must be revalued at the lower of current fair market value or book value prior to any subsequent lease. (2) (a) (intro.) Subject to the limitations of this subsection and sub. (1), and provided that the aggregate book value of all tangible personal property held for lease under this subsection does not exceed 10% of the consolidated assets of the bank, a bank may do any of the following: 1. Invest in tangible personal property, including, without limitation, vehicles, manufactured homes, machinery, equipment or furniture for lease financing transactions on a net lease basis; or.
(3) (a) (intro.) Subject to the limitations of this subsection and sub. (1), and provided the lease is a net, full-payout lease representing a noncancelable obligation of the lessee, notwithstanding the possible early termination of that lease, a bank may do all of the following: 1. Become the legal or beneficial owner and lessor of specific personal property or otherwise acquire such property; or.
2. Become the owner and lessor of personal property by purchasing the property from another lessor in connection with its purchase of the related lease; and.
(b) Any unguaranteed portion of the estimated residual value relied upon by the bank to yield a full return on a net, full-payout lease shall may not exceed 25% of the original cost of the property to the lessor. The amount of any estimated value guaranteed by a manufacturer, lessee or a third party which is not an affiliate of the bank may exceed 25% of the original cost of the property where the bank has determined, and can provide, full supporting documentation that the guarantor has the resources to meet the guarantee.
SECTION 5. DFI-Bkg 3.06 (1) (intro.) and (1) (a) and (b) are amended to read:
DFI-Bkg 3.06 (1) (intro.) Authority. A bank may purchase for its own account shares of investment companies registered with the securities and exchange commission or a privately offered fund sponsored by an affiliated commercial bank if the investment company shares meet all of the following requirements:
(a) The bank has an equitable and equal proportionate undivided interest in the underlying assets of the investment company,.
(b) The bank is shielded from personal liability for acts or obligations of the investment company, and.
SECTION 6. DFI-Bkg 3.07 (1) is amended to read:
DFI-Bkg 3.07 (1) A savings and loan association may be converted into a state chartered bank in compliance with 12 USC 1815 (d) (2) (G), with the approval of the administrator of the division of banking. SECTION 7. DFI-Bkg 3.08 (1) (h) (intro.), 1. and 2. are amended to read:
DFI-Bkg 3.08 (1) (h) (intro.) “Open-end credit" means consumer credit extended by a bank under a plan in which all of the following apply:
1. The bank reasonably contemplates repeated transactions;.
2. The bank may impose a finance charge from time to time on an outstanding unpaid balance; and.
SECTION 8. DFI-Bkg 3.08 (2) (intro.) is created to read:
DFI-Bkg 3.08 (2) (intro.) A bank may not do any of the following:
SECTION 9. DFI-Bkg 3.08 (2) (a), (b), and (c) (intro.) are amended to read:
DFI-Bkg (2) (a) Anti-tying. A bank shall not extend Extend credit or alter the terms or conditions of an extension of credit conditioned upon the customer entering into a debt cancellation contract or debt suspension agreement with the bank.
(b) Misrepresentations generally. A bank shall not engage Engage in any practice or use any advertisement that is false, misleading or deceptive, or which omits to state material information, or otherwise would cause a reasonable person to reach an erroneous belief with respect to information that may be disclosed under this section.
(c) Prohibited contract terms. (intro.) A bank shall not offer Offer debt cancellation contracts or debt suspension agreements that contain any of the following:
SECTION 10. DFI-Bkg 3.08 (5) (c) 1. and 2. are amended to read:
DFI-Bkg 3.08 (5) (c) 1. `Short form disclosures.' The bank shall make the short form disclosures orally at the time the bank first solicits the purchase of a contract.
2. `Long form disclosures.' The bank shall make the long form disclosures in writing before the customer completes the purchase of the contract. If the initial solicitation occurs in person, the bank shall provide the long form disclosures in writing at that time.
SECTION 11. DFI-Bkg 3.08 (5) (c) 3. to 5. are repealed.
SECTION 12. DFI-Bkg 3.08 (5) (d) 1. and 2. are amended to read:
DFI-Bkg 3.08 (5) (d) 1. `Understandable disclosures.' The disclosures required by this section shall be conspicuous, simple, direct, readily understandable, and designed to call attention to the nature and significance of the information provided.
2. `Meaningful disclosures.' The disclosures required by this section shall be in a meaningful form.
SECTION 13. DFI-Bkg 4.08 is amended to read:
DFI-Bkg 4.08 A financial institution that establishes or maintains a financial subsidiary shall ensure do all of the following:
(1) The Ensure that the procedures of the financial institution for identifying and managing financial and operational risk within the financial institution and the financial subsidiary adequately protect the financial institution from such risk; and.
(2) The Ensure that the financial institution has, for the protection of the financial institution, reasonable policies and procedures to preserve the separate corporate identity and limited liability of the financial institution and the financial subsidiaries of the financial institution.
SECTION 14. DFI-Bkg 8.01 (1) is amended to read:
DFI-Bkg 8.01 (1) “Branch” means a permanent, an attended banking facility, whether fixed, intermittent, or mobile, that is authorized pursuant to s. 221.0302, Stats., which has no legal identity, assets or liabilities separate from the home office, and which accepts deposits, cashes checks, lends money or provides trust services. The term does not include the home office of a bank, a customer bank communications terminal or a night depository. SECTION 15. DFI-Bkg 8.09 is amended to read:
DFI-Bkg 8.09 Joint branch personnel shall may not represent more than one bank in any transactions or activities or services offered at the joint branch bank other than the cashing of checks or acceptance of deposits or loan payments.
SECTION 16. DFI-Bkg 11.02 of the administrative code is amended to read:
DFI-Bkg 11.02 Place of hearings. Unless otherwise specifically provided by law or ordered by the administrator, all hearings shall be held at the office of the Administrator of the Division of Banking of Wisconsin, 4822 Madison Yards Way, North Tower, Madison, Wisconsin, 53703 53705.
SECTION 17. DFI-Bkg 11.03 of the administrative code is amended to read:
DFI-Bkg 11.03 All hearings shall be conducted and presided over by the administrator or such subordinate as may be designated to hear the matter the administrator designates.
SECTION 18. DFI-Bkg 11.06 (2) of the administrative code is amended to read:
DIF-Bkg 11.06 (2) Any person desiring a copy of the transcript shall so indicate at the commencement of the proceedings arrange for a court reporter, at the person’s expense, at least 30 days before the commencement of the proceedings and shall simultaneously so notify the administrator. In the alternative, any person desiring a copy of the transcript shall request that the administrator obtain the services of a court reporter to produce the transcript, at the person’s expense, at least 30 days before the commencement of the proceedings. The cost of each copy shall be paid by the person requesting it. A charge of 75¢ for each 8 1⁄2 by 11 inch page will be charged for copies prepared by the office of administrator. However, if the administrator determines that any party is impecunious or would suffer an undue economic hardship, such party shall be provided a copy of the transcript without charge. Where a transcript of proceedings, other than a contested case is prepared at the request of any party, such party shall also pay all recording and transcription costs.
SECTION 19. DFI-Bkg 11.07 of the administrative code is amended to read:
DFI-Bkg 11.07 The administrator shall not be is not bound by common law or statutory rules of evidence, except that all privileges set forth in ch. 905, Stats., apply. All testimony having reasonable probative value shall be admitted, but immaterial, irrelevant, or unduly repetitious testimony shall be excluded. The rules of privilege recognized by law shall be given effect. Basic principles of relevancy, materiality, and probative force, as recognized in equitable proceedings, shall govern the proof of all questions of fact. SECTION 20. DFI-Bkg 11.08 is renumbered DFI-Bkg 11.08 (1) and amended to read:
DFI-Bkg 11.08 (1) All Except as provided in sub. (2), all papers filed in connection with any hearing shall be either printed or typewritten and, as far as practicable, shall be on paper 8 1⁄2 inches wide and 11 inches long. An original and 2 copies thereof shall be filed with the administrator and copies thereof shall also be served or furnished, as the case may be, to any other party or person interested who enters an appearance in said proceeding. Pleadings shall bear the name and mailing address of the party or a representative presenting the same. All pleadings, notices and other papers shall be captioned “BEFORE THE ADMINISTRATOR OF THE DIVISION OF BANKING OF WISCONSIN."
SECTION 21. DFI-Bkg 11.08 (2) is created to read:
DFI-Bkg 11.08 (2) Notwithstanding the provisions of sub. (1) and s. DFI-Bkg 11.09, papers and copies filed as described in sub. (1) may be filed by electronic means, as directed by the administrator. SECTION 22. DFI-Bkg 11.09 is amended to read:
DFI-Bkg 11.09 Unless Except as provided in s. DFI-Bkg 11.08 (2), and unless otherwise provided by law, all orders, notices and other papers may be served by the administrator by first class or registered mail addressed to any party at the last known post office address or to the party's attorney of record. Papers required to be filed with the administrator may be mailed to the following address: Office of the Administrator of the Division of Banking, P.O. Box 7876, Madison, Wisconsin, 53707. SECTION 23. DFI-Bkg 11.11 is amended to read:
DFI-Bkg 11.11 (1) (intro.) The respondent shall be required to make file an answer to any such notice in a contested case within the time therein specified and failure in the notice. Failure to do so shall constitute a default, but such the administrator may excuse the default may be excused upon proper showing upon such terms as may be deemed the administrator considers to be just. The answer of the respondent shall be verified unless an admission of the allegations might subject the respondent to prosecution for a felony. Such The answer must contain all of the following:
(a) (1) A specific denial of each of the material allegations of the charges which that are controverted by the respondent; .
(b) (2) A statement of any new matter constituting a defense or affecting the respondent's situation which respondent wishes to have considered.
