Summary of Recently Enacted State Legislation

The below article is the Special Focus section of the January 2020 Compliance Journal. The full issue may be viewed by clicking here.

There are several recently enacted state legislative items which impact financial institutions. The following article discusses select aspects of three laws that have been passed this session. For more comprehensive information on each law, please review the applicable Act, each of which is included at the end of this article. This article is focused on law that has been passed. At time of this article’s publication, the legislature is still in session. Bills that are later signed into law will be discussed in future publications.  

Financial Institutions Modernization Act 

The Financial Institutions Modernization Act, or Omnibus Bill, implemented by 2019 Wisconsin Act 65, is a piece of legislation that makes several changes to statutes relating to banking practices. Each change is presented with both a summary and detailed explanation below. 

Banking Review Board 

Summary: Combines the Banking Review Board with the Savings Institutions Review Board into a single Banking Institutions Review Board. 

Detailed Explanation: The Wisconsin Department of Financial Institutions has two five-member boards which advise DFI’s division of banking. The Banking Review Board advises and reviews administrative actions on matters related to banks and banking. The Savings Institution Review Board advises and reviews administrative actions on matters related to savings banks and savings and loan associations. This provision combines both authorities and purposes into a single review board. 

Lost, Destroyed, or Stolen Cashier’s Check  

Summary: Reduces the period, from 90 days to 30 days, after certain checks or issued, during which the issuing bank must pay the item after it has been claimed as lost, stolen, or destroyed.  

Detailed Explanation: The Wisconsin Uniform Commercial Code Section 403.312 describes the procedure by which a financial institution may place a stop payment on a lost, destroyed, or stolen cashier’s check, teller’s check, or certified check. Under that procedure, a claim to such an item becomes enforceable, generally, on the 90th day following the date of the check. Meaning, that a financial institution must, generally, pay an item claimed as lost, destroyed, or stolen if it is presented during the 90 day period following the date of the check or risk liability for an improper stop payment. This provision reduces that period from 90 days to 30 days.  

Mortgage Loan Originators  

Summary: Provides temporary authority to act as a mortgage loan originator (MLO) while a license application is pending.  

Detailed Explanation: This provision gives temporary authority to act as an MLO to an individual who applies to DFI for a license so long as that individual is employed by a licensed mortgage banker or mortgage broker and was a registered MLO in another state under certain conditions and time requirements. In addition, the individual must not have been previously denied a license, subject to a cease and desist by the Bureau of Consumer Financial Protection (CFPB), and not been convicted of a disqualifying crime. If eligible, the temporary authority beings when the individual furnishes application information to the NMLSR and ends upon the earlier of DFI granting or denying the license, withdrawal of the application for an MLO license, the application is determined to be incomplete, or the license is granted. During the temporary period, the individual is considered to be associated with the mortgage banker or mortgage broker employing them and is considered to have MLO authority subject to all applicable requirements and duties.  

Possession of Property Subject to Garnishment  

Summary: Grants financial institutions two business days to respond to certain legal process.

Detailed Explanation: A garnishee financial institution in possession of property subject to garnishment is liable for the surrender of that property only upon expiration of two business days to comply with or respond to the garnishee summons and complaints.  

Data Processing Services Provided to Financial Institutions  

Summary: A financial institution retains property rights of any data transferred to an independent data processing servicer.  

Detailed Explanation: Under this provision an independent data processing servicer is an entity that provides to a financial institution electronic data processing services. It excludes the exchange of data and settlement of funds between unaffiliated financial institutions through terminals, remote service units, and customer bank communications terminals. If a financial institution transfers data to an independent data processing servicer, the financial institution retains all right, title, interest, and legal claim to the data. The transfer only permits temporary control of the data for purposes of the contracted services. This provision also places required contract disclosures upon data processing servicers.  

Federal Home Loan Bank Loans  

Summary: Eliminates certain limitations on loans to state banks made by a Federal Home Loan Bank.  

Detailed Explanation: This provision eliminates the current 20-year term limitation and the limitation on the value of bank assets that may be pledged as collateral by a Federal Home Loan Bank. 

Effective Date 

The Omnibus Bill became effective November 27, 2019, except for three provisions. The provisions creating the banking institutions review board takes effect on May 2, 2021. The provisions affecting licensing and employment transition for MLOs took effect on November 28, 2019. The provisions for independent data processing servicers takes effect on March 1, 2020. 

Industrial Hemp 

2019 Wisconsin Act 68 was enacted to make several changes to the law governing industrial hemp. Act 68 aligns Wisconsin law to be consistent with the 2018 Federal Farm Bill. An important consideration for banks to keep in mind is that Act 68 directs the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) to write new rules. It is WBA’s understanding that DATCP will continue under the 2014 Farm Bill provisions, and existing Wisconsin regulation at the time of this article’s publication, in 2020. DATCP is preparing to write rules pursuant to Act 68 and expects to begin the new program in 2021. Select provisions from Act 68 are included below. 

  • The term “hemp” instead of “industrial hemp” is used, which is defined as “Cannabis sativa L." and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9-tetrahydrocannabinol (THC) concentration of not more than 0.3 percent on a dry weight basis or the maximum concentration allowed under federal law up to 1 percent, whichever is greater.”  
  • No person may produce hemp in Wisconsin without a license from DATCP if required under federal law.  
  • DATCP is provided authority to establish procedures for the following:  
    • Maintaining information relating to hemp production, 
    • Testing for THC concentrations in hemp, 
    • Disposing of hemp plants grown illegally, 
    • Complying with enforcement provisions, and 
    • Conducting annual inspections of hemp producers.  
  • Redefines “marijuana,” for the purposes of the controlled substances act, to exclude hemp.  
  • Excludes THC contained in hemp from the list of Schedule I controlled substances.  
  • Changes the current hemp pilot program under DATCP to a permanent program and sunsets the pilot program.  
  • Allows DATCP to set criteria for approving persons to undertake any sampling and testing of hemp that DATCP requires by rule and to approve persons that meet the criteria.  
  • Requires DATCP to issue a fit for commerce certificate after hemp is tested, or if DATCP determines that hemp is not required to be tested.  
  • Allows a person, whose personally identifying information relating to the hemp program is in DATCP’s possession, to authorize the disclosure of that information. 

Agricultural Development Loan Guarantee Program 

2019 Wisconsin Act 62 (Act 62) creates a pilot loan guarantee program under the Agricultural Development Loan Guarantee Program administered by the Wisconsin Housing and Economic Development Authority (WHEDA) along with other changes. 

Specifically, Act 62 makes the following changes to WHEDA’s existing Agricultural Development Loan Guarantee Program:  

  • The term of a loan guarantee may not exceed ten years for land and buildings, five years for inventory, equipment, and machinery, and two years for permanent working capital and marketing expenses.  
  • The closing fee for a loan guarantee under the program may not exceed 1.5 percent. 

Act 62 requires WHEDA to allocate $3,000,000 to the pilot program. WHEDA may guarantee collection of 25 percent of the principal of an eligible loan or $750,000, whichever is less. The fixed amount guaranteed is payable to the lender for the entire term of the guarantee. Otherwise, a loan guarantee under the pilot program is subject to all prior requirements. The pilot program sunsets as of July 1, 2024.


In general, recent legislative activity has been favorable for the banking industry. WBA will continue to monitor existing bills and update the membership on any significant changes. If you have any additional questions on any of the above laws, do not hesitate to contact us at wbalegal@wisbank.com

Click here for Act 65.

Click here for Act 68.

Click here for Act 62.

By, Ally Bates