Last week, both the Senate and Assembly versions of the Financial Institution Modernization Act cleared the respective committees the bills were heard in. Both the Assembly Committee on Ways & Means and the Senate Committee on Financial Institutions unanimously recommended passage to the full legislature. The Assembly is expected to vote on the bill this Thursday and the Senate next week.
The bills were authored by Representative Terry Katsma (R-Oostburg) and Senator Howard Marklein (R-Spring Green). WBA's Jon Turke testified in support of the bill. In addition to Turke, Charlie Schmalz, CEO of East Wisconsin Savings Bank, Kaukauna, Jeff Schmid, Fox River State Bank, Burlington, Dave Feldhaus from the Federal Home Loan Bank of Chicago, John Knight of BoardmanClark Law Firm, and Jim Sheriff of Reinhart Law were there to support the bills as well.
AB 822/SB 686 consists of the following changes to state law:
- Add the Federal Home Loan Bank (FHLB) to the list of entities to which the Wisconsin Department of Financial Institutions (DFI) may disclose reports of examination and confidential supervisory information pertaining to Wisconsin banks, thrifts and credit unions.
- Amend Wisconsin law to explicitly permit a letter of credit (LC) from the FHLB to be used to secure Wisconsin public unit deposits.
- Amend Wisconsin laws to provide that an FHLB (1) would not be subject to a stay or prohibited from exercising its rights to collateral pledged to the FHLB by an insurance company member who becomes subject to an insolvency proceeding; and (2) would be excluded from the voidable preference provision of the insolvency statutes. This provides parity for FHLB insurance members with their fellow bank members.
- Repeal requirement that banks shall pay interest on escrow accounts. This change would not prohibit such interest accounts if a bank chooses to offer.
- Allow a savings bank to lend up to 20% of its capital to one member. This change brings parity for savings banks with their state bank, universal bank, and savings & loan charters.
- Federalize the Wisconsin definition of outside sales representative. Outside sales representatives are no longer going door-to-door to make sales. This change will bring law in-line with current practice.
- Allow DFI to accept information collected by other agencies (FDIC) to be used to satisfy certain exam state requirements.
- Allow banks to pay dividends out of its capital to match similar powers for national banks
Thanks not only to those who testified in committee but also everyone that came to Capitol Day in January to carry our message to their legislators.