1.1                          A bill for an act
  1.2             relating to financial institutions; authorizing 
  1.3             facsimile or electronic filings and certifications; 
  1.4             regulating the powers and structure of certain 
  1.5             institutions; regulating consumer credit; modifying 
  1.6             lending authority; regulating fees and charges; making 
  1.7             technical and conforming changes; amending Minnesota 
  1.8             Statutes 1996, sections 46.04, by adding a 
  1.9             subdivision; 46.044, by adding a subdivision; 46.046, 
  1.10            by adding a subdivision; 46.047, subdivision 2; 46.07, 
  1.11            subdivision 2; 46.131, subdivision 2; 47.20, 
  1.12            subdivisions 9 and 14; 47.206, subdivision 6; 47.55, 
  1.13            subdivision 1; 47.56; 47.59, subdivisions 1, 4, 5, 6, 
  1.14            and 12; 47.61, subdivision 3, and by adding a 
  1.15            subdivision; 47.64, by adding subdivisions; 47.75, 
  1.16            subdivision 1; 48.01, subdivision 2; 48.09, by adding 
  1.17            a subdivision; 48.15, subdivisions 2 and 4; 48.24, 
  1.18            subdivision 2, and by adding a subdivision; 48.512, by 
  1.19            adding a subdivision; 48.61, subdivision 7, and by 
  1.20            adding a subdivision; 49.215, subdivision 3; 49.33; 
  1.21            49.36, subdivision 4; 49.42; 50.245; 51A.38, 
  1.22            subdivision 1; 52.04, subdivision 2a, and by adding a 
  1.23            subdivision; 52.062, subdivision 1, and by adding a 
  1.24            subdivision; 52.063; 52.064, by adding a subdivision; 
  1.25            52.13; 52.201; 53.04, by adding a subdivision; 53.05; 
  1.26            53.09, subdivision 2a; 55.06, subdivision 1; 56.07; 
  1.27            56.10, subdivision 1; 56.131, subdivisions 1 and 4; 
  1.28            59A.08, subdivision 3, and by adding a subdivision; 
  1.29            59A.11, subdivisions 2 and 3; 62B.04, subdivision 1; 
  1.30            300.20, subdivision 2; 303.02, subdivision 4; 303.25, 
  1.31            subdivision 5; 325F.68, subdivision 2; 332.21; 332.23, 
  1.32            subdivisions 1, 2, and 5; and 332.50, subdivisions 1 
  1.33            and 2; Laws 1996, chapter 414, article 1, section 45; 
  1.34            proposing coding for new law in Minnesota Statutes, 
  1.35            chapter 48; repealing Minnesota Statutes 1996, 
  1.36            sections 13.99, subdivision 13; 47.29; 47.31; 47.32; 
  1.37            49.47; 49.48; 50.03; 50.23; and 59A.14. 
  1.38  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.39     Section 1.  Minnesota Statutes 1996, section 46.04, is 
  1.40  amended by adding a subdivision to read: 
  1.41     Subd. 4.  [APPLICATIONS, FACSIMILE OR ELECTRONIC MEDIA.] (a)
  2.1   The commissioner when providing forms and procedural guidance to 
  2.2   persons governed by or seeking approval to operate under the 
  2.3   chapters referred to in this section may prescribe alternatives 
  2.4   to paper forms and delivery in person or by mail.  In 
  2.5   considering accepting filings by facsimile or electronic media, 
  2.6   the commissioner may accept fees and reimbursement for costs 
  2.7   associated with the applications and notices by wire transfer 
  2.8   and debit card. 
  2.9      (b) Certifications required to authenticate, officiate, or 
  2.10  establish standing of the application or notice as a matter of 
  2.11  law, rule, or sound business practice may be authenticated in an 
  2.12  alternative to paper-based original signatures or notarial seals 
  2.13  on facsimile or electronic media submissions in a technically 
  2.14  competent means at the discretion of the commissioner, including 
  2.15  but not limited to, document imaging meeting the standard in 
  2.16  subdivision 3, bar coding, personal identification numbers, or 
  2.17  other reliable communicated verification technique. 
  2.18     Sec. 2.  Minnesota Statutes 1996, section 46.044, is 
  2.19  amended by adding a subdivision to read: 
  2.20     Subd. 3.  [SPECIAL PURPOSE BANKS, EXCEPTIONS.] For purposes 
  2.21  of applications to organize and operate special purpose banks as 
  2.22  defined in section 46.046, subdivision 5, the conditions in 
  2.23  subdivision 1, clauses (2) and (4), do not apply. 
  2.24     Sec. 3.  Minnesota Statutes 1996, section 46.046, is 
  2.25  amended by adding a subdivision to read: 
  2.26     Subd. 5.  [SPECIAL PURPOSE BANK.] Special purpose bank 
  2.27  means a bank as defined in subdivision 2 that: 
  2.28     (1) engages only in credit card operations as authorized in 
  2.29  section 47.59; 
  2.30     (2) does not accept demand deposits or deposits that the 
  2.31  depositor may withdraw by check or similar means for payment to 
  2.32  third parties or others; 
  2.33     (3) does not accept savings or time deposits of less than 
  2.34  $100,000; 
  2.35     (4) maintains only one office that accepts deposits; and 
  2.36     (5) does not engage in the business of making commercial 
  3.1   loans. 
  3.2      Sec. 4.  Minnesota Statutes 1996, section 46.047, 
  3.3   subdivision 2, is amended to read: 
  3.4      Subd. 2.  [BANKING INSTITUTION.] The term "banking 
  3.5   institution" means a bank, trust company, bank and trust 
  3.6   company, savings bank, or industrial loan and thrift institution 
  3.7   operating under section 53.04, subdivision 5, that is organized 
  3.8   under the laws of this state, or a holding company which owns or 
  3.9   otherwise controls the banking institution. 
  3.10     Sec. 5.  Minnesota Statutes 1996, section 46.07, 
  3.11  subdivision 2, is amended to read: 
  3.12     Subd. 2.  [CONFIDENTIAL RECORDS.] The commissioner shall 
  3.13  divulge facts and information obtained in the course of 
  3.14  examining financial institutions under the commissioner's 
  3.15  supervision only when and to the extent required or permitted by 
  3.16  law to report upon or take special action regarding the affairs 
  3.17  of an institution, or ordered by a court of law to testify or 
  3.18  produce evidence in a civil or criminal proceeding, except that 
  3.19  the commissioner may furnish information as to matters of mutual 
  3.20  interest to an official or examiner of the federal reserve 
  3.21  system, the Federal Deposit Insurance Corporation, the Federal 
  3.22  Office of Thrift Supervision, the Federal Home Loan Bank System, 
  3.23  the National Credit Union Administration, comptroller of the 
  3.24  currency, a legally constituted state credit union share 
  3.25  insurance corporation approved under section 52.24 other state 
  3.26  bank supervisory agencies subject to cooperative agreements 
  3.27  authorized by section 49.411, subdivision 7, the United States 
  3.28  Small Business Administration, for purposes of sections 53.09, 
  3.29  subdivision 2a, and 56.10, subdivision 1, or state and federal 
  3.30  law enforcement agencies.  The commissioner shall not be 
  3.31  required to disclose the name of a debtor of a financial 
  3.32  institution under the commissioner's supervision, or anything 
  3.33  relative to the private accounts, ownership, or transactions of 
  3.34  an institution, or any fact obtained in the course of an 
  3.35  examination thereof, except as herein provided.  For purposes of 
  3.36  this subdivision, a subpoena is not an order of a court of law.  
  4.1   These records are classified confidential or protected nonpublic 
  4.2   for purposes of the Minnesota government data practices act and 
  4.3   their destruction, as prescribed in section 46.21, is exempt 
  4.4   from the provisions of chapter 138 and Laws 1971, chapter 529, 
  4.5   so far as their deposit with the state archives.  
  4.6      Sec. 6.  Minnesota Statutes 1996, section 46.131, 
  4.7   subdivision 2, is amended to read: 
  4.8      Subd. 2.  Each bank, trust company, savings bank, savings 
  4.9   association, small loan company regulated lender, industrial 
  4.10  loan and thrift company, credit union, motor vehicle sales 
  4.11  finance company, debt prorating agency and insurance premium 
  4.12  finance company organized under the laws of this state or 
  4.13  required to be administered by the commissioner of commerce 
  4.14  shall pay into the state treasury its proportionate share of the 
  4.15  cost of maintaining the department of commerce. 
  4.16     Sec. 7.  Minnesota Statutes 1996, section 47.20, 
  4.17  subdivision 9, is amended to read: 
  4.18     Subd. 9.  For purposes of this subdivision the term 
  4.19  "mortgagee" shall mean all state banks and trust companies, 
  4.20  national banking associations, state and federally chartered 
  4.21  savings associations, mortgage banks, savings banks, insurance 
  4.22  companies, credit unions or assignees of the above. 
  4.23     (a) Each mortgagee requiring funds of a mortgagor to be 
  4.24  paid into an escrow, agency or similar account for the payment 
  4.25  of taxes or homeowners insurance premiums with respect to a 
  4.26  mortgaged one-to-four family, owner occupied residence located 
  4.27  in this state, unless the account is required by federal law or 
  4.28  regulation or maintained in connection with a conventional loan 
  4.29  in an original principal amount in excess of 80 percent of the 
  4.30  lender's appraised value of the residential unit at the time the 
  4.31  loan is made or maintained in connection with loans insured or 
  4.32  guaranteed by the secretary of housing and urban development, by 
  4.33  the administrator of veterans affairs, or by the administrator 
  4.34  of the farmers home administration or any successor, shall 
  4.35  calculate interest on such funds at a rate of not less than 
  4.36  three percent per annum.  Such interest shall be computed on the 
  5.1   average monthly balance in such account on the first of each 
  5.2   month for the immediately preceding 12 months of the calendar 
  5.3   year or such other fiscal year as may be uniformly adopted by 
  5.4   the mortgagee for such purposes and shall be annually credited 
  5.5   to the remaining principal balance on the mortgage, or at the 
  5.6   election of the mortgagee, paid to the mortgagor or credited to 
  5.7   the mortgagor's account.  If the interest exceeds the remaining 
  5.8   balance, the excess shall be paid to the mortgagor or vendee.  
  5.9   The requirement to pay interest shall apply to such accounts 
  5.10  created in conjunction with mortgage loans made prior to July 1, 
  5.11  1996. 
  5.12     (b) Unless the account is exempt from the requirements of 
  5.13  paragraph (a), a mortgagee shall allow a mortgagor to elect to 
  5.14  discontinue the escrow account escrowing for taxes and 
  5.15  homeowners insurance after the seventh fifth anniversary of the 
  5.16  date of the mortgage, unless the mortgagor has been more than 30 
  5.17  days delinquent in the previous 12 months.  This paragraph shall 
  5.18  apply to accounts created prior to July 1, 1996, as well as to 
  5.19  accounts created on or after July 1, 1996.  The mortgagor's 
  5.20  election shall be in writing.  If the escrow account has a 
  5.21  negative balance or a shortage at the time the mortgagor 
  5.22  requests discontinuance, the mortgagee is not obligated to allow 
  5.23  discontinuance until the escrow account is balanced or the 
  5.24  shortage has been repaid. 
  5.25     (c) The mortgagee shall notify the mortgagor within 60 days 
  5.26  after the seventh fifth anniversary of the date of the mortgage 
  5.27  if the right to discontinue the escrow account is in accordance 
  5.28  with paragraph (b).  For mortgage loans entered into, on or 
  5.29  prior to July 1, 1989, the notice required by this paragraph 
  5.30  shall be provided to the mortgagor by January 1, 1997. 
  5.31     (d) A mortgagee may require the mortgagor to reestablish 
  5.32  the escrow account if the mortgagor has failed to make timely 
  5.33  payments for two consecutive payment periods at any time during 
  5.34  the remaining term of the mortgage, or if the mortgagor has 
  5.35  failed to pay taxes or insurance premiums when due.  A payment 
  5.36  received during a grace period shall be deemed timely. 
  6.1      (e) The mortgagee shall, subject to paragraph (b), return 
  6.2   any funds remaining in the account to the mortgagor within 60 
  6.3   days after receipt of the mortgagor's written notice of election 
  6.4   to discontinue the escrow account. 
  6.5      (f) The mortgagee shall not charge a direct fee for the 
  6.6   administration of the escrow account, nor shall the mortgagee 
  6.7   charge a fee or other consideration for allowing the mortgagor 
  6.8   to discontinue the escrow account. 
  6.9      Sec. 8.  Minnesota Statutes 1996, section 47.20, 
  6.10  subdivision 14, is amended to read: 
  6.11     Subd. 14.  (a) A lender requiring or offering private 
  6.12  mortgage insurance shall make available to the borrower or other 
  6.13  person paying the insurance premium the same premium payment 
  6.14  plans as are available to the lender in paying the private 
  6.15  mortgage insurance premium.  
  6.16     (b) Any refund or rebate for unearned private mortgage 
  6.17  insurance premiums shall be paid to the borrower or other person 
  6.18  actually providing the funds for payment of the premium.  
  6.19     (c) With regard to first mortgage loans made before, on, or 
  6.20  after January 1, 1997, the mortgagor shall have the right to 
  6.21  elect, in writing, to cancel borrower-purchased private mortgage 
  6.22  insurance if all of the following terms and conditions have been 
  6.23  met: 
  6.24     (1) if the current unpaid principal balance of a first 
  6.25  mortgage is 75 percent or less of the current fair market 
  6.26  appraised value of the property.  "Current fair market appraised 
  6.27  value" shall be based upon a current appraisal by a real estate 
  6.28  appraiser licensed or certified by the appropriate state or 
  6.29  federal agency and reasonably acceptable to the lender.  The 
  6.30  lender may require the mortgagor to pay for the appraisal; 
  6.31     (2) the mortgagor's monthly installments of principal, 
  6.32  interest, and escrow obligations have not been more than 30 days 
  6.33  past due over the 24-month period immediately preceding the 
  6.34  request for cancellation and all accrued late charges have been 
  6.35  paid; 
  6.36     (3) the mortgage was made at least 24 months prior to the 
  7.1   receipt of a request for cancellation of private mortgage 
  7.2   insurance; 
  7.3      (4) the property securing the mortgage is owner-occupied; 
  7.4   and 
  7.5      (5) the mortgage has not been pooled with other mortgages 
  7.6   in order to constitute, in whole or in part, collateral for 
  7.7   bonds issued by the state of Minnesota or any political 
  7.8   subdivision of the state of Minnesota or of any agency of any 
  7.9   political subdivision of the state of Minnesota. 
  7.10     (d) Other than the appraisal fee allowed pursuant to 
  7.11  paragraph (c), clause (1), the lender shall not charge the 
  7.12  borrower a fee or other consideration for cancellation of the 
  7.13  private mortgage insurance. 
  7.14     (e) With respect to all existing or future first mortgage 
  7.15  loans, a lender requiring private mortgage insurance shall, 
  7.16  after the payment of the 24th monthly premium installment of 
  7.17  private mortgage insurance, provide an annual written notice to 
  7.18  each mortgagor currently paying premiums for private mortgage 
  7.19  insurance.  The notice may be included in the annual statement 
  7.20  or may be included in other regular mailings to the mortgagor.  
  7.21  The annual notice shall be on its own page, unless included in a 
  7.22  private mortgage insurance notice required under the federal 
  7.23  Real Estate Settlement Procedures Act, and shall appear 
  7.24  substantially as follows: 
  7.25       "NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE 
  7.26     If you currently pay private mortgage insurance premiums, 
  7.27  you may have the right to cancel the insurance and cease paying 
  7.28  premiums.  This would permit you to make a lower total monthly 
  7.29  mortgage payment.  In most cases, you have the right to cancel 
  7.30  private mortgage insurance if the principal balance of your loan 
  7.31  is 80 percent or less of the current fair market appraised value 
  7.32  of your home.  If you wish to learn whether you are eligible to 
  7.33  cancel this insurance, please contact us at (address/phone)." 
  7.34     (f) If a mortgage loan governed by paragraph (c) is 
  7.35  serviced in accordance with the guidelines of either the Federal 
  7.36  National Mortgage Association or the Federal Home Loan Mortgage 
  8.1   Corporation, the lender shall cancel private mortgage insurance 
  8.2   in accordance with the cancellation guidelines of the applicable 
  8.3   entity in effect at the time the request for cancellation is 
  8.4   received. 
  8.5      Sec. 9.  Minnesota Statutes 1996, section 47.206, 
  8.6   subdivision 6, is amended to read: 
  8.7      Subd. 6.  [PROHIBITED ACTS.] A person, including a lender, 
  8.8   may not advise, encourage, or induce a borrower or third party 
  8.9   to misrepresent information that is the subject of a loan 
  8.10  application or to violate the terms of the agreement.  Neither a 
  8.11  mortgage lender nor a mortgage broker shall advertise mortgage 
  8.12  terms, including interest rate and discount points, which were 
  8.13  not available from the lender or broker on the date or dates 
  8.14  specified in the advertisement.  For purposes of this section, 
  8.15  "advertisement" shall include a list or sampler of mortgage 
  8.16  terms compiled, with or without charge to the lender or broker, 
  8.17  by a newspaper, and shall also include advertising on the 
  8.18  Internet. 
  8.19     Sec. 10.  Minnesota Statutes 1996, section 47.55, 
  8.20  subdivision 1, is amended to read: 
  8.21     Subdivision 1.  [BANKING FACILITIES IN OPERATION PRIOR TO 
  8.22  MAY 1, 1971.] A bank may retain and operate one detached 
  8.23  facility as it may have had in operation prior to May 1, 1971 
  8.24  without requirement of approval hereunder, provided that its 
  8.25  function is limited as provided in section 47.53 and its 
  8.26  location conforms with the provisions of section 47.52.  A bank 
  8.27  having such a retained detached facility shall be limited to 
  8.28  operating five additional detached facilities. 
  8.29     Sec. 11.  Minnesota Statutes 1996, section 47.56, is 
  8.30  amended to read: 
  8.31     47.56 [TRANSFER OF LOCATION.] 
  8.32     The location of a detached facility transferred to another 
  8.33  location outside of a radius of three miles measured in a 
  8.34  straight line is subject to the same procedures and approval as 
  8.35  required hereunder for establishing a new detached facility, 
  8.36  except that.  The location of a detached facility transferred to 
  9.1   another location within the lesser of a radius of three miles 
  9.2   measured in a straight line from the existing location or the 
  9.3   municipality, as defined in section 47.51, in which it is 
  9.4   located is subject to the same procedures and approval as are 
  9.5   required in section 47.101, subdivision 2.  The relocation of a 
  9.6   detached facility within a municipality of 10,000 or less 
  9.7   population shall not require consent of other banks required in 
  9.8   section 47.52.  
  9.9      Sec. 12.  Minnesota Statutes 1996, section 47.59, 
  9.10  subdivision 1, is amended to read: 
  9.11     Subdivision 1.  [DEFINITIONS.] For purposes of this 
  9.12  section, the following definitions shall apply. 
  9.13     (a) "Actuarial method" has the meaning given the term in 
  9.14  the Code of Federal Regulations, title 12, part 226, and 
  9.15  appendix J thereto. 
  9.16     (b) "Annual percentage rate" has the meaning given the term 
  9.17  in the Code of Federal Regulations, title 12, part 226, but 
  9.18  using the definition of "finance charge" used in this section. 
  9.19     (c) "Borrower" means a debtor under a loan or a purchaser 
  9.20  or debtor under a credit sale contract. 
  9.21     (d) "Business purpose" means a purpose other than a 
  9.22  personal, family, household, or agricultural purpose. 
  9.23     (e) "Cardholder" means a person to whom a credit card is 
  9.24  issued or who has agreed with the financial institution to pay 
  9.25  obligations arising from the issuance to or use of the card by 
  9.26  another person. 
  9.27     (f) "Consumer loan" means a loan made by a financial 
  9.28  institution in which: 
  9.29     (1) the debtor is a person other than an organization; 
  9.30     (2) the debt is incurred primarily for a personal, family, 
  9.31  or household purpose; and 
  9.32     (3) the debt is payable in installments or a finance charge 
  9.33  is made. 
  9.34     (g) "Credit" means the right granted by a financial 
  9.35  institution to a borrower to defer payment of a debt, to incur 
  9.36  debt and defer its payment, or to purchase property or services 
 10.1   and defer payment. 
 10.2      (h) "Credit card" means a card or device issued under an 
 10.3   arrangement pursuant to which a financial institution gives to a 
 10.4   cardholder the privilege of obtaining credit from the financial 
 10.5   institution or other person in purchasing or leasing property or 
 10.6   services, obtaining loans, or otherwise.  A transaction is 
 10.7   "pursuant to a credit card" only if credit is obtained according 
 10.8   to the terms of the arrangement by transmitting information 
 10.9   contained on the card or device orally, in writing, by 
 10.10  mechanical or electronic methods, or in any other manner.  A 
 10.11  transaction is not "pursuant to a credit card" if the card or 
 10.12  device is used solely in that transaction to: 
 10.13     (1) identify the cardholder or evidence the cardholder's 
 10.14  creditworthiness and credit is not obtained according to the 
 10.15  terms of the arrangement; 
 10.16     (2) obtain a guarantee of payment from the cardholder's 
 10.17  deposit account, whether or not the payment results in a credit 
 10.18  extension to the cardholder by the financial institution; or 
 10.19     (3) effect an immediate transfer of funds from the 
 10.20  cardholder's deposit account by electronic or other means, 
 10.21  whether or not the transfer results in a credit extension to the 
 10.22  cardholder by the financial institution. 
 10.23     (i) "Credit sale contract" means a contract evidencing a 
 10.24  credit sale.  "Credit sale" means a sale of goods or services, 
 10.25  or an interest in land, in which: 
 10.26     (1) credit is granted by a seller who regularly engages as 
 10.27  a seller in credit transactions of the same kind; and 
 10.28     (2) the debt is payable in installments or a finance charge 
 10.29  is made. 
 10.30     (j) "Finance charge" has the meaning given in the Code of 
 10.31  Federal Regulations, title 12, part 226, except that the 
 10.32  following will not in any event be considered a finance charge: 
 10.33     (1) a charge as a result of default or delinquency under 
 10.34  subdivision 6 if made for actual unanticipated late payment, 
 10.35  delinquency, default, or other similar occurrence, and a charge 
 10.36  made for an extension or deferment under subdivision 5, unless 
 11.1   the parties agree that these charges are finance charges; 
 11.2      (2) an additional charge under subdivision 6; or 
 11.3      (3) a discount, if a financial institution purchases a loan 
 11.4   at less than the face amount of the obligation or purchases or 
 11.5   satisfies obligations of a cardholder pursuant to a credit card 
 11.6   and the purchase or satisfaction is made at less than the face 
 11.7   amount of the obligation; 
 11.8      (4) fees paid by a borrower or person described in 
 11.9   subdivision 4 to a broker, provided the financial institution or 
 11.10  seller under a credit sale contract does not require use of the 
 11.11  broker to obtain credit; or 
 11.12     (5) any commission, expense reimbursement, or other sum 
 11.13  received by a financial institution or seller under a credit 
 11.14  sale contract in connection with insurance described in 
 11.15  subdivision 6. 
 11.16     (k) "Financial institution" means a state or federally 
 11.17  chartered bank, a state or federally chartered bank and trust, a 
 11.18  trust company with banking powers, a state or federally 
 11.19  chartered saving bank, a state or federally chartered savings 
 11.20  association, an industrial loan and thrift company, or a 
 11.21  regulated lender. 
 11.22     (l) "Loan" means: 
 11.23     (1) the creation of debt by the financial institution's 
 11.24  payment of money to the borrower or a third person for the 
 11.25  account of the borrower; 
 11.26     (2) the creation of debt pursuant to a credit card in any 
 11.27  manner, including a cash advance or the financial institution's 
 11.28  honoring a draft or similar order for the payment of money drawn 
 11.29  or accepted by the borrower, paying or agreeing to pay the 
 11.30  borrower's obligation, or purchasing or otherwise acquiring the 
 11.31  borrower's obligation from the obligee or the borrower's 
 11.32  assignee; 
 11.33     (3) the creation of debt by a cash advance to a borrower 
 11.34  pursuant to an overdraft line of credit arrangement; 
 11.35     (4) the creation of debt by a credit to an account with the 
 11.36  financial institution upon which the borrower is entitled to 
 12.1   draw immediately; 
 12.2      (5) the forbearance of debt arising from a loan; and 
 12.3      (6) the creation of debt pursuant to open-end credit. 
 12.4      "Loan" does not include the forbearance of debt arising 
 12.5   from a sale or lease, a credit sale contract, or an overdraft 
 12.6   from a person's deposit account with a financial institution 
 12.7   which is not pursuant to a written agreement to pay overdrafts 
 12.8   with the right to defer repayment thereof. 
 12.9      (m) "Official fees" means: 
 12.10     (1) fees and charges which actually are or will be paid to 
 12.11  public officials for determining the existence of or for 
 12.12  perfecting, releasing, terminating, or satisfying a security 
 12.13  interest or mortgage relating to a loan or credit sale, and any 
 12.14  separate fees or charges which actually are or will be paid to 
 12.15  public officials for recording a notice described in section 
 12.16  580.032, subdivision 1; and 
 12.17     (2) premiums payable for insurance in lieu of perfecting a 
 12.18  security interest or mortgage otherwise required by a financial 
 12.19  institution in connection with a loan or credit sale, if the 
 12.20  premium does not exceed the fees and charges described in clause 
 12.21  (1), which would otherwise be payable. 
 12.22     (n) "Organization" means a corporation, government, 
 12.23  government subdivision or agency, trust, estate, partnership, 
 12.24  joint venture, cooperative, limited liability company, limited 
 12.25  liability partnership, or association. 
 12.26     (o) "Person" means a natural person or an organization. 
 12.27     (p) "Principal" means the total of: 
 12.28     (1) the amount paid to, received by, or paid or repayable 
 12.29  for the account of, the borrower; and 
 12.30     (2) to the extent that payment is deferred: 
 12.31     (i) the amount actually paid or to be paid by the financial 
 12.32  institution for additional charges permitted under this section; 
 12.33  and 
 12.34     (ii) prepaid finance charges. 
 12.35     Sec. 13.  Minnesota Statutes 1996, section 47.59, 
 12.36  subdivision 4, is amended to read: 
 13.1      Subd. 4.  [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 
 13.2   PARTY.] (a) A person may enter into a credit sale contract for 
 13.3   sale to a financial institution and a financial institution may 
 13.4   purchase and enforce the contract, if the annual percentage rate 
 13.5   provided for in the contract does not exceed that permitted in 
 13.6   this section, or, in the case of contracts governed by sections 
 13.7   168.66 to 168.77 motor vehicle installment sales as defined in 
 13.8   section 168.66, the annual percentage rates permitted by 
 13.9   subdivision 4a. 
 13.10     (b) The annual percentage rate may not exceed the 
 13.11  equivalent of the greater of either of the following:  
 13.12     (1) the total of:  
 13.13     (i) 36 percent per year on that part of the unpaid balances 
 13.14  of the amount financed that is $300 or less; 
 13.15     (ii) 21 percent per year on that part of the unpaid 
 13.16  balances of the amount financed which exceeds $300 but does not 
 13.17  exceed $1,000; and 
 13.18     (iii) 15 percent per year on that part of the unpaid 
 13.19  balances of the amount financed which exceeds $1,000; or 
 13.20     (2) 19 percent per year on the unpaid balances of the 
 13.21  amount financed.  
 13.22     (c) This subdivision does not limit or restrict the manner 
 13.23  of calculating the finance charge whether by way of add-on, 
 13.24  discount, discount points, single annual percentage rate, 
 13.25  precomputed charges, variable rate, interest in advance, 
 13.26  compounding, or otherwise, if the annual percentage rate 
 13.27  calculated under paragraph (d) does not exceed that permitted by 
 13.28  this section.  The finance charge may be contracted for and 
 13.29  earned at the single annual percentage rate that would earn the 
 13.30  same finance charge as the graduated rates when the debt is paid 
 13.31  according to the agreed terms and the finance charge is 
 13.32  calculated under paragraph (d).  If the finance charge is 
 13.33  calculated and collected in advance, or included in the 
 13.34  principal amount of the contract, and the borrower prepays the 
 13.35  contract in full, the financial institution shall credit the 
 13.36  borrower with a refund of the charge to the extent the annual 
 14.1   percentage rate yield on the contract would exceed the annual 
 14.2   percentage rate on the contract as originally determined under 
 14.3   paragraph (d) and taking into account the prepayment.  For the 
 14.4   purpose of calculating the refund under this subdivision, the 
 14.5   financial institution may assume that the contract was paid 
 14.6   before the date of prepayment according to the schedule of 
 14.7   payments under the contract and that all payments were paid on 
 14.8   their due dates.  For contracts repayable in substantially equal 
 14.9   successive monthly installments, the financial institution may 
 14.10  calculate the refund as the portion of the finance charge 
 14.11  allocable on an actuarial basis to all wholly unexpired payment 
 14.12  periods following the date of prepayment, based on the annual 
 14.13  percentage rate on the contract as originally determined under 
 14.14  paragraph (d), and for the purpose of calculating the refund may 
 14.15  assume that all payments are made on the due date.  
 14.16     (d) The annual percentage rate must be calculated in 
 14.17  accordance with Code of Federal Regulations, title 12, part 226, 
 14.18  except that the following will not in any event be considered a 
 14.19  finance charge:  
 14.20     (1) a charge as a result of delinquency or default under 
 14.21  subdivision 6 if made for actual unanticipated late payment, 
 14.22  delinquency, default, or other similar occurrence, and a charge 
 14.23  made for an extension or deferment under subdivision 5, unless 
 14.24  the parties agree that these charges are finance charges; 
 14.25     (2) an additional charge under subdivision 6; or 
 14.26     (3) a discount, if a financial institution purchases a 
 14.27  contract evidencing a credit sale at less than the face amount 
 14.28  of the obligation or purchases or satisfies obligations of a 
 14.29  cardholder according to a credit card and the purchase or 
 14.30  satisfaction is made at less than the face amount of the 
 14.31  obligation.  
 14.32     Sec. 14.  Minnesota Statutes 1996, section 47.59, 
 14.33  subdivision 5, is amended to read: 
 14.34     Subd. 5.  [EXTENSIONS, DEFERMENTS, AND CONVERSION TO 
 14.35  INTEREST BEARING.] (a) The parties may agree in writing, either 
 14.36  in the loan contract or credit sale contract or in a subsequent 
 15.1   agreement, to a deferment of wholly unpaid installments.  For 
 15.2   precomputed loans and credit sale contracts, the manner of 
 15.3   deferment charge shall be determined as provided for in this 
 15.4   section.  A deferment postpones the scheduled due date of the 
 15.5   earliest unpaid installment and all subsequent installments as 
 15.6   originally scheduled, or as previously deferred, for a period 
 15.7   equal to the deferment period.  The deferment period is that 
 15.8   period during which no installment is scheduled to be paid by 
 15.9   reason of the deferment.  The deferment charge for a one-month 
 15.10  period may not exceed the applicable charge for the installment 
 15.11  period immediately following the due date of the last undeferred 
 15.12  payment.  A proportionate charge may be made for deferment 
 15.13  periods of more or less than one month.  A deferment charge is 
 15.14  earned pro rata during the deferment period and is fully earned 
 15.15  on the last day of the deferment period.  If a loan or credit 
 15.16  sale is prepaid in full during a deferment period, the financial 
 15.17  institution shall make or credit to the borrower a refund of the 
 15.18  unearned deferment charge in addition to any other refund or 
 15.19  credit made for prepayment of the loan or credit sale in full.  
 15.20     For the purpose of this subdivision, "applicable charge" 
 15.21  means the amount of finance charge attributable to each monthly 
 15.22  installment period for the loan or credit sale contract.  The 
 15.23  applicable charge is computed as if each installment period were 
 15.24  one month and any charge for extending the first installment 
 15.25  period beyond the one month, or reduction in charge for a first 
 15.26  installment less than one month, is ignored.  The applicable 
 15.27  charge for any installment period is that which would have been 
 15.28  made for the period had the loan been made on an 
 15.29  interest-bearing basis at the single annual percentage rate 
 15.30  provided for in the contract based upon the assumption that all 
 15.31  payments were made according to schedule.  For convenience in 
 15.32  computation, the financial institution may round the single 
 15.33  annual rate to the nearest one quarter of one percent. 
 15.34     (b) Subject to a refund of unearned finance or deferment 
 15.35  charge required by this section, a financial institution may 
 15.36  convert a loan or credit sale contract to an interest bearing 
 16.1   balance, if: 
 16.2      (1) the loan contract or credit sale contract so provides 
 16.3   and is subject to a change of the terms of the written agreement 
 16.4   between the parties; or 
 16.5      (2) the loan contract so provides and two or more 
 16.6   installments are delinquent one full month or more on any due 
 16.7   date. 
 16.8      Thereafter, and in lieu of any other default, extension, or 
 16.9   deferment charges, the single annual percentage rate must be 
 16.10  determined under the applicable charge provisions of this 
 16.11  subdivision the single annual percentage rate and other charges 
 16.12  must be determined as provided under this section for 
 16.13  interest-bearing transactions. 
 16.14     Sec. 15.  Minnesota Statutes 1996, section 47.59, 
 16.15  subdivision 6, is amended to read: 
 16.16     Subd. 6.  [ADDITIONAL CHARGES.] (a) In addition to the 
 16.17  finance charges permitted by this section, a financial 
 16.18  institution or person described in subdivision 4, paragraph (a), 
 16.19  may contract for and receive the following additional charges 
 16.20  that may be included in the principal amount of the loan or 
 16.21  credit sale unpaid balances:  
 16.22     (1) official fees and taxes; 
 16.23     (2) charges for insurance as described in paragraph (b); 
 16.24     (3) with respect to a loan or credit sale contract secured 
 16.25  by real estate, the following "closing costs," if they are bona 
 16.26  fide, reasonable in amount, and not for the purpose of 
 16.27  circumvention or evasion of this section: 
 16.28     (i) fees or premiums for title examination, abstract of 
 16.29  title, title insurance, surveys, or similar purposes; 
 16.30     (ii) fees for preparation of a deed, mortgage, settlement 
 16.31  statement, or other documents, if not paid to the financial 
 16.32  institution; 
 16.33     (iii) escrows for future payments of taxes, including 
 16.34  assessments for improvements, insurance, and water, sewer, and 
 16.35  land rents; 
 16.36     (iv) fees for notarizing deeds and other documents; 
 17.1      (v) appraisal and credit report fees; and 
 17.2      (vi) fees for determining whether any portion of the 
 17.3   property is located in a flood zone and fees for ongoing 
 17.4   monitoring of the property to determine changes, if any, in 
 17.5   flood zone status; 
 17.6      (4) a delinquency charge on a payment, including the 
 17.7   minimum payment due in connection with the open-end credit, not 
 17.8   paid in full on or before the tenth day after its due date in an 
 17.9   amount not to exceed five percent of the amount of the payment 
 17.10  or $5.20, whichever is greater; 
 17.11     (5) for a returned check or returned automatic payment 
 17.12  withdrawal request, an amount not in excess of the service 
 17.13  charge limitation in section 332.50; and 
 17.14     (6) charges for other benefits, including insurance, 
 17.15  conferred on the borrower that are of a type that is not for 
 17.16  credit. 
 17.17     (b) An additional charge may be made for insurance written 
 17.18  in connection with the loan or credit sale contract, which may 
 17.19  be included in the principal amount of the loan or credit sale 
 17.20  unpaid balances:  
 17.21     (1) with respect to insurance against loss of or damage to 
 17.22  property, or against liability arising out of the ownership or 
 17.23  use of property, if the financial institution furnishes a clear, 
 17.24  conspicuous, and specific statement in writing to the borrower 
 17.25  setting forth the cost of the insurance if obtained from or 
 17.26  through the financial institution and stating that the borrower 
 17.27  may choose the person through whom the insurance is to be 
 17.28  obtained; 
 17.29     (2) with respect to credit insurance or mortgage insurance 
 17.30  providing life, accident, health, or unemployment coverage, if 
 17.31  the insurance coverage is not required by the financial 
 17.32  institution, and this fact is clearly and conspicuously 
 17.33  disclosed in writing to the borrower, and the borrower gives 
 17.34  specific, dated, and separately signed affirmative written 
 17.35  indication of the borrower's desire to do so after written 
 17.36  disclosure to the borrower of the cost of the insurance; and 
 18.1      (3) with respect to the vendor's single interest insurance, 
 18.2   but only (i) to the extent that the insurer has no right of 
 18.3   subrogation against the borrower; and (ii) to the extent that 
 18.4   the insurance does not duplicate the coverage of other insurance 
 18.5   under which loss is payable to the financial institution as its 
 18.6   interest may appear, against loss of or damage to property for 
 18.7   which a separate charge is made to the borrower according to 
 18.8   clause (1); and (iii) if a clear, conspicuous, and specific 
 18.9   statement in writing is furnished by the financial institution 
 18.10  to the borrower setting forth the cost of the insurance if 
 18.11  obtained from or through the financial institution and stating 
 18.12  that the borrower may choose the person through whom the 
 18.13  insurance is to be obtained. 
 18.14     (c) In addition to the finance charges and other additional 
 18.15  charges permitted by this section, a financial institution may 
 18.16  contract for and receive the following additional charges in 
 18.17  connection with open-end credit, which may be included in the 
 18.18  principal amount of the loan or balance upon which the finance 
 18.19  charge is computed:  
 18.20     (1) annual charges, not to exceed $50 per annum, payable in 
 18.21  advance, for the privilege of opening and maintaining open-end 
 18.22  credit; 
 18.23     (2) charges for the use of an automated teller machine; 
 18.24     (3) charges for any monthly or other periodic payment 
 18.25  period in which the borrower has exceeded or, except for the 
 18.26  financial institution's dishonor would have exceeded, the 
 18.27  maximum approved credit limit, in an amount not in excess of the 
 18.28  service charge permitted in section 332.50; 
 18.29     (4) charges for obtaining a cash advance in an amount not 
 18.30  to exceed the service charge permitted in section 332.50; and 
 18.31     (5) charges for check and draft copies and for the 
 18.32  replacement of lost or stolen credit cards.  
 18.33     (d) In addition to the finance charges and other additional 
 18.34  charges permitted by this section, a financial institution may 
 18.35  contract for and receive a one-time loan administrative fee not 
 18.36  exceeding $25 in connection with closed-end credit, which may be 
 19.1   included in the principal balance upon which the finance charge 
 19.2   is computed.  This paragraph applies only to closed-end credit 
 19.3   in an original principal amount of $4,320 or less.  The 
 19.4   determination of an original principal amount must exclude the 
 19.5   administrative fee contracted for and received according to this 
 19.6   paragraph. 
 19.7      Sec. 16.  Minnesota Statutes 1996, section 47.59, 
 19.8   subdivision 12, is amended to read: 
 19.9      Subd. 12.  [CONSUMER PROTECTIONS.] (a) Financial 
 19.10  institutions shall comply with the requirements of the federal 
 19.11  Truth in Lending Act, United States Code, title 15, sections 
 19.12  1601 to 1693, in connection with a consumer loan or credit sale 
 19.13  for a consumer purpose where the federal Truth in Lending Act is 
 19.14  applicable.  A financial institution shall give the following 
 19.15  disclosure to the borrower in writing at the time an open-end 
 19.16  credit account is established if the financial institution 
 19.17  imposes a loan fee, points, or similar charge that relates to 
 19.18  the opening of the account which is not included in the annual 
 19.19  percentage rate given pursuant to the federal Truth in Lending 
 19.20  Act:  "YOU HAVE BEEN ASSESSED FINANCE CHARGES, OR POINTS, WHICH 
 19.21  ARE NOT INCLUDED IN THE ANNUAL PERCENTAGE RATE.  THESE CHARGES 
 19.22  MAY BE REFUNDED, IN WHOLE OR IN PART, IF YOU DO NOT USE YOUR 
 19.23  LINE OF CREDIT OR IF YOU REPAY YOUR LINE OF CREDIT EARLY.  THESE 
 19.24  CHARGES INCREASE THE COST OF YOUR CREDIT." 
 19.25     (b) Financial institutions shall comply with the following 
 19.26  consumer protection provisions in connection with a consumer 
 19.27  loan or credit sale for a consumer purpose:  sections 325G.02 to 
 19.28  325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to 
 19.29  325G.36, and Code of Federal Regulations, title 12, part 535, 
 19.30  where those statutes or regulations are applicable.  
 19.31     (c) An assignment of a consumer's earnings by the consumer 
 19.32  to a financial institution as payment or as security for payment 
 19.33  of a debt arising out of a consumer loan or consumer credit sale 
 19.34  is unenforceable by the financial institution and revocable by 
 19.35  the consumer except where the assignment:  (1) by its terms is 
 19.36  revocable at the will of the consumer; (2) is a payroll 
 20.1   deduction plan or preauthorized payment plan, beginning at the 
 20.2   time of the transaction, in which the consumer authorizes a 
 20.3   series of wage deductions as a method of making each payment; or 
 20.4   (3) applies only to wages or other earnings already earned at 
 20.5   the time of the assignment.  
 20.6      Sec. 17.  Minnesota Statutes 1996, section 47.61, 
 20.7   subdivision 3, is amended to read: 
 20.8      Subd. 3.  (a) "Electronic financial terminal" means an 
 20.9   electronic information processing device that is established to 
 20.10  do either or both of the following: 
 20.11     (1) capture the data necessary to initiate financial 
 20.12  transactions; or 
 20.13     (2) through its attendant support system, store or initiate 
 20.14  the transmission of the information necessary to consummate a 
 20.15  financial transaction. 
 20.16     (b) "Electronic financial terminal" does not include: 
 20.17     (1) a telephone; 
 20.18     (2) an electronic information processing device that is 
 20.19  used internally by a financial institution to conduct the 
 20.20  business activities of the institution; or 
 20.21     (3) an electronic point-of-sale terminal operated by a 
 20.22  retailer that is used to process payments for the purchase of 
 20.23  goods and services by consumers, and which also may be used to 
 20.24  obtain cash advances or cash back not to exceed $25 and only if 
 20.25  incidental to the retail sale transactions, through the use of 
 20.26  credit cards or debit cards, provided that the payment 
 20.27  transactions using debit cards are subject to the federal 
 20.28  Electronic Funds Transfer Act, United States Code, title 12, 
 20.29  sections 1693 et seq., and Regulation E of the Federal Reserve 
 20.30  Board, Code of Federal Regulations, title 12, subpart 205.2; 
 20.31  this clause does not exempt the retailer from liability for 
 20.32  negligent conduct or intentional misconduct of the operator 
 20.33  under section 47.69, subdivision 5; 
 20.34     (4) stored-value cards to only process transactions other 
 20.35  than those authorized by this section.  Stored-value cards are 
 20.36  transaction cards having magnetic stripes or computer chips that 
 21.1   enable electronic value to be added or deducted as needed; or 
 21.2      (5) a personal computer possessed by and operated 
 21.3   exclusively by the account holder. 
 21.4      Sec. 18.  Minnesota Statutes 1996, section 47.61, is 
 21.5   amended by adding a subdivision to read: 
 21.6      Subd. 8.  [SHARED NETWORK.] "Shared network" means an 
 21.7   electronic information communication and processing facility 
 21.8   used by two or more different owners of electronic financial 
 21.9   terminals to receive, transmit, or retransmit electronic 
 21.10  impulses or other electronic indicia of transactions, 
 21.11  originating at electronic terminals, to financial institutions 
 21.12  or other transmission facilities for the purpose of: 
 21.13     (1) the withdrawal of money by a customer from the 
 21.14  customer's account; 
 21.15     (2) the deposit of funds by a customer in the customer's 
 21.16  account with a financial institution; 
 21.17     (3) the transfer of funds by a customer between one or more 
 21.18  accounts maintained by the customer with a financial 
 21.19  institution; or 
 21.20     (4) a request for information by a customer regarding the 
 21.21  balance of the account of a customer with a financial 
 21.22  institution. 
 21.23     Sec. 19.  Minnesota Statutes 1996, section 47.64, is 
 21.24  amended by adding a subdivision to read: 
 21.25     Subd. 7.  [SURCHARGES ALLOWED.] Any owner of an electronic 
 21.26  financial terminal that is located in this state and on or 
 21.27  within a 50-mile radius of the Canadian border and that is 
 21.28  connected to a shared network may impose a fee for the use of an 
 21.29  electronic financial terminal if the imposition of the fee is 
 21.30  disclosed at a time and in a manner that allows a customer to 
 21.31  cancel or terminate the transaction without incurring a fee. 
 21.32     Sec. 20.  Minnesota Statutes 1996, section 47.64, is 
 21.33  amended by adding a subdivision to read: 
 21.34     Subd. 8.  [PROHIBITION.] An agreement to share an 
 21.35  electronic financial terminal as part of a shared network may 
 21.36  not: 
 22.1      (1) prohibit, limit, or restrict the right of the owner of 
 22.2   an electronic financial terminal to charge a customer any fee 
 22.3   not prohibited by state or federal law; or 
 22.4      (2) require a financial institution to limit or waive its 
 22.5   rights or obligations under this article. 
 22.6      Sec. 21.  Minnesota Statutes 1996, section 47.75, 
 22.7   subdivision 1, is amended to read: 
 22.8      Subdivision 1.  [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.] 
 22.9   A commercial bank, savings bank, savings association, credit 
 22.10  union, or industrial loan and thrift company may act as trustee 
 22.11  or custodian under the Federal Self-Employed Individual Tax 
 22.12  Retirement Act of 1962, as amended, of a medical savings account 
 22.13  under the Federal Health Insurance Portability and 
 22.14  Accountability Act of 1996, as amended, and also under the 
 22.15  Federal Employee Retirement Income Security Act of 1974, as 
 22.16  amended.  The trustee or custodian may accept the trust funds if 
 22.17  the funds are invested only in savings accounts or time deposits 
 22.18  in the commercial bank, savings bank, savings association, 
 22.19  credit union, or industrial loan and thrift company.  All funds 
 22.20  held in the fiduciary capacity may be commingled by the 
 22.21  financial institution in the conduct of its business, but 
 22.22  individual records shall be maintained by the fiduciary for each 
 22.23  participant and shall show in detail all transactions engaged 
 22.24  under authority of this subdivision.  
 22.25     Sec. 22.  Minnesota Statutes 1996, section 48.01, 
 22.26  subdivision 2, is amended to read: 
 22.27     Subd. 2.  [BANKING INSTITUTION.] The term "banking 
 22.28  institution" means any bank, trust company, bank and trust 
 22.29  company, or savings bank which is now or may hereafter be 
 22.30  organized under the laws of this state.  For purposes of 
 22.31  sections 48.38, 48.84, and 501B.10 501B.151, subdivision 6 11, 
 22.32  and to the extent permitted by federal law, "banking 
 22.33  institution" includes any national banking association or 
 22.34  affiliate exercising trust powers in this state. 
 22.35     Sec. 23.  Minnesota Statutes 1996, section 48.09, is 
 22.36  amended by adding a subdivision to read: 
 23.1      Subd. 3.  [QUALIFIED SUBCHAPTER S SUBSIDIARY.] A bank that 
 23.2   has met the eligibility requirements under title I, subtitle C 
 23.3   of the Small Business Job Protection Act of 1996 or related 
 23.4   state of Minnesota tax law may apply to the commissioner for 
 23.5   approval of a plan and agreement for a distribution of earnings 
 23.6   to the shareholder(s) of the bank on a basis other than a 
 23.7   dividend under subdivisions 1 and 2.  Approval of a plan of 
 23.8   distribution under this subdivision may be rescinded by the 
 23.9   commissioner upon 90-day prior notice to the bank.  Failure to 
 23.10  comply with this notice or qualification of a distribution under 
 23.11  subdivisions 1 and 2 is considered a violation subject to the 
 23.12  commissioner's action under section 45.027 or 46.24. 
 23.13     Sec. 24.  Minnesota Statutes 1996, section 48.15, 
 23.14  subdivision 2, is amended to read: 
 23.15     Subd. 2.  The commissioner of commerce may authorize banks, 
 23.16  bank and trust companies, or trust companies organized under the 
 23.17  laws of this state to engage in any banking or trust activity in 
 23.18  which banks subject to the jurisdiction of the federal 
 23.19  government may hereafter be authorized to engage by federal 
 23.20  legislation, ruling, or regulation and those activities 
 23.21  authorized in section 48.61, subdivision 7, paragraph (a), 
 23.22  clause (3).  The commissioner may not authorize state banks as 
 23.23  defined by section 48.01, to engage in any banking activity 
 23.24  prohibited by the laws of this state. 
 23.25     Sec. 25.  Minnesota Statutes 1996, section 48.15, 
 23.26  subdivision 4, is amended to read: 
 23.27     Subd. 4.  [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.] A 
 23.28  state bank may act as trustee or custodian of a self-employed 
 23.29  retirement plan under the Federal Self-Employed Individual Tax 
 23.30  Retirement Act of 1962, as amended, of a medical savings account 
 23.31  under the Federal Health Insurance Portability and 
 23.32  Accountability Act of 1996, as amended, and of an individual 
 23.33  retirement account under the Federal Employee Retirement Income 
 23.34  Security Act of 1974, as amended, if the bank's duties as 
 23.35  trustee or custodian are essentially ministerial or custodial in 
 23.36  nature and the funds are invested only (1) in the bank's own 
 24.1   savings or time deposits; or (2) in any other assets at the 
 24.2   direction of the customer if the bank does not exercise any 
 24.3   investment discretion, invest the funds in collective investment 
 24.4   funds administered by it, or provide any investment advice with 
 24.5   respect to those account assets. 
 24.6      Affiliated discount brokers may be utilized by the bank 
 24.7   acting as trustee or custodian for self-directed IRAs, if 
 24.8   specifically authorized and directed in appropriate documents.  
 24.9   The relationship between the affiliated broker and the bank must 
 24.10  be fully disclosed.  Brokerage commissions to be charged to the 
 24.11  IRA by the affiliated broker should be accurately disclosed.  
 24.12  Provisions should be made for disclosure of any changes in 
 24.13  commission rates prior to their becoming effective.  The 
 24.14  affiliated broker may not provide investment advice to the 
 24.15  customer.  All funds held in the fiduciary capacity may be 
 24.16  commingled by the financial institution in the conduct of its 
 24.17  business, but individual records shall be maintained by the 
 24.18  fiduciary for each participant and shall show in detail all 
 24.19  transactions engaged under authority of this subdivision.  The 
 24.20  authority granted by this section is in addition to, and not 
 24.21  limited by, section 47.75. 
 24.22     Sec. 26.  Minnesota Statutes 1996, section 48.24, 
 24.23  subdivision 2, is amended to read: 
 24.24     Subd. 2.  Loans not exceeding 25 percent of such capital 
 24.25  and surplus made upon first mortgage security on improved real 
 24.26  estate in the state or in an adjoining state within 20 miles of 
 24.27  the place where the bank is located or in a state or adjoining 
 24.28  state in which a branch of the bank established according to 
 24.29  section 49.411 is located, shall not constitute a liability of 
 24.30  the maker of the notes secured by such mortgages within the 
 24.31  meaning of the foregoing provision limiting liability, but shall 
 24.32  be an actual liability of the maker.  These mortgage loans shall 
 24.33  be limited to, and in no case exceed, 50 percent of the cash 
 24.34  value of the security covered by the mortgage, except mortgage 
 24.35  loans guaranteed as provided by the servicemen's readjustment 
 24.36  act of 1944, as now or hereafter amended, or for which there is 
 25.1   a commitment to so guarantee or for which a conditional 
 25.2   guarantee has been issued, which loans shall in no case exceed 
 25.3   60 percent of the cash value of the security covered by such 
 25.4   mortgage.  For the purposes of this subdivision, real estate is 
 25.5   improved when substantial and permanent development or 
 25.6   construction has contributed substantially to its value, and 
 25.7   agricultural land is improved when farm crops are regularly 
 25.8   raised on such land without further substantial improvements.  
 25.9      Sec. 27.  Minnesota Statutes 1996, section 48.24, is 
 25.10  amended by adding a subdivision to read: 
 25.11     Subd. 9.  [RIGHT TO ACT TO AVOID LOSS.] This section does 
 25.12  not prohibit the bank from advancing funds that may be 
 25.13  reasonably necessary to avoid loss on a loan or investment made 
 25.14  subject to this section or an obligation created in good faith.  
 25.15  The rights under this subdivision are in addition to and not 
 25.16  inconsistent with section 48.21. 
 25.17     Sec. 28.  [48.476] [REPRESENTATIVE TRUST OFFICE.] 
 25.18     Subdivision 1.  [DEFINITIONS.] For purposes of this 
 25.19  section, the terms in this subdivision have the meanings given. 
 25.20     (a) "Representative trust office" means an office at which 
 25.21  a trust company or bank with trust powers has been authorized by 
 25.22  the commissioner to engage in a trust business other than acting 
 25.23  as a fiduciary. 
 25.24     (b) "Acting as a fiduciary" means to: 
 25.25     (1) accept or execute trusts, including to: 
 25.26     (i) act as trustee under a written agreement; 
 25.27     (ii) receive money or other property in its capacity as a 
 25.28  trustee for investment in real or personal property; 
 25.29     (iii) act as trustee and perform the fiduciary duties 
 25.30  committed or transferred to it by order of court of competent 
 25.31  jurisdiction; 
 25.32     (iv) act as trustee of the estate of a deceased person; or 
 25.33     (v) act as trustee for a minor or incapacitated person; 
 25.34     (2) administer in any other fiduciary capacity real or 
 25.35  personal property; or 
 25.36     (3) act according to order of court of competent 
 26.1   jurisdiction as executor or administrator of the estate of a 
 26.2   deceased person or as a guardian or conservator for a minor or 
 26.3   incapacitated person. 
 26.4      Subd. 2.  [AUTHORITY FOR REPRESENTATIVE TRUST OFFICES; 
 26.5   PRIOR WRITTEN NOTICE.] (a) A state trust institution may 
 26.6   establish or acquire and maintain representative trust offices 
 26.7   anywhere in this state.  A state trust institution desiring to 
 26.8   establish or acquire and maintain such an office shall file a 
 26.9   written notice with the commissioner setting forth the name of 
 26.10  the state trust institution and the location of the proposed 
 26.11  additional office and furnish a copy of the resolution adopted 
 26.12  by the board authorizing the additional office. 
 26.13     (b) The state trust institution may begin business at the 
 26.14  additional office on the 31st day after the date the 
 26.15  commissioner receives the notice, unless the commissioner 
 26.16  specifies an earlier or later date. 
 26.17     (c) The 30-day period of review may be extended by the 
 26.18  commissioner on a determination that the written notice raises 
 26.19  issues that require additional information or additional time 
 26.20  for analysis.  If the period of review is extended, the state 
 26.21  trust institution may establish the additional office only on 
 26.22  prior written approval by the commissioner. 
 26.23     (d) The commissioner may deny approval of the additional 
 26.24  office if the commissioner finds that the state trust 
 26.25  institution lacks sufficient financial resources to undertake 
 26.26  the proposed expansion without adversely affecting its safety or 
 26.27  soundness or that the proposed office would be contrary to the 
 26.28  public interest. 
 26.29     Subd. 3.  [AUTHORITY FOR OUT-OF-STATE TRUST OFFICES; PRIOR 
 26.30  WRITTEN NOTICE.] (a) A state trust institution may establish and 
 26.31  maintain representative trust office or acquire and maintain an 
 26.32  office in a state other than this state.  A state trust 
 26.33  institution desiring to establish or acquire and maintain an 
 26.34  office in another state under this section shall file a notice 
 26.35  on a form prescribed by the commissioner, which shall set forth 
 26.36  the name of the state trust institution, the location of the 
 27.1   proposed office, and whether the laws of the jurisdiction where 
 27.2   the office will be located permit the office to be maintained by 
 27.3   the state trust institution; and furnish a copy of the 
 27.4   resolution adopted by the board authorizing the out-of-state 
 27.5   office. 
 27.6      (b) The state trust institution may begin business at the 
 27.7   additional office on the 31st day after the date the 
 27.8   commissioner receives the notice, unless the commissioner 
 27.9   specifies an earlier or later date. 
 27.10     (c) The 30-day period of review may be extended by the 
 27.11  commissioner on a determination that the written notice raises 
 27.12  issues that require additional information or additional time 
 27.13  for analysis.  If the period of review is extended, the state 
 27.14  trust institution may establish the additional office only on 
 27.15  prior written approval by the commissioner. 
 27.16     (d) The commissioner may deny approval of the additional 
 27.17  office if the commissioner finds that the state trust 
 27.18  institution lacks sufficient financial resources to undertake 
 27.19  the proposed expansion without adversely affecting its safety or 
 27.20  soundness or that the proposed office would be contrary to the 
 27.21  public interest.  In acting on the notice, the commissioner 
 27.22  shall consider the views of the appropriate bank supervisory 
 27.23  agencies. 
 27.24     Sec. 29.  Minnesota Statutes 1996, section 48.512, is 
 27.25  amended by adding a subdivision to read: 
 27.26     Subd. 4a.  [IDENTIFICATION NOT REQUIRED FOR DEBIT CARD 
 27.27  TRANSACTIONS.] The identification requirements of subdivision 4 
 27.28  do not apply to a transaction account that is accessible 
 27.29  exclusively by debit card.  A debit card activates a transaction 
 27.30  account at a financial intermediary by means of an electronic 
 27.31  information processing device and contemporaneously completes 
 27.32  the debt to the account only on the condition that funds are 
 27.33  available and confirmed. 
 27.34     Sec. 30.  Minnesota Statutes 1996, section 48.61, 
 27.35  subdivision 7, is amended to read: 
 27.36     Subd. 7.  [SUBSIDIARIES.] (a) A state bank or trust company 
 28.1   may organize, acquire, or invest in a subsidiary located in this 
 28.2   state for the purposes of engaging in one or more of the 
 28.3   following activities, subject to the prior written approval of 
 28.4   the commissioner: 
 28.5      (1) any activity, not including receiving deposits or 
 28.6   paying checks, that a state bank is authorized to engage in 
 28.7   under state law or rule or under federal law or regulation 
 28.8   unless the activity is prohibited by the laws of this state; 
 28.9      (2) any activity that a bank clerical service corporation 
 28.10  is authorized to engage in under section 48.89; and 
 28.11     (3) any other activity authorized for a national bank, a 
 28.12  bank holding company, or a subsidiary of a national bank or bank 
 28.13  holding company under federal law or regulation of general 
 28.14  applicability, and approved by the commissioner by rule.  
 28.15     (b) A bank or trust company subsidiary may engage in an 
 28.16  activity under this section only upon application together with 
 28.17  a filing fee of $250 and with the prior written approval of the 
 28.18  commissioner.  In approving or denying a proposed activity, the 
 28.19  commissioner shall consider the financial and management 
 28.20  strength of the bank or trust company, the current written 
 28.21  operating plan and policies of the proposed subsidiary 
 28.22  corporation, the bank or trust company's community reinvestment 
 28.23  record, and whether the proposed activity should be conducted 
 28.24  through a subsidiary of the bank or trust company. 
 28.25     (c) The aggregate amount of funds invested in either an 
 28.26  equity or loan capacity in all of the subsidiaries of the bank 
 28.27  or trust company authorized under this subdivision shall not 
 28.28  exceed 25 percent of the capital stock and paid in surplus of 
 28.29  the bank or trust company. 
 28.30     (d) A subsidiary organized or acquired under this 
 28.31  subdivision is subject to the examination and enforcement 
 28.32  authority of the commissioner under chapters 45 and 46 to the 
 28.33  same extent as a state bank or trust company. 
 28.34     (e) For the purposes of this section, "subsidiary" means a 
 28.35  corporation of which more than 50 percent of the voting shares 
 28.36  are owned or controlled by the bank or trust company. 
 29.1      Sec. 31.  Minnesota Statutes 1996, section 48.61, is 
 29.2   amended by adding a subdivision to read: 
 29.3      Subd. 10.  [SUBSIDIARIES ORGANIZED FOR PURPOSES OF 
 29.4   CORPORATE REORGANIZATION.] A subsidiary may be organized solely 
 29.5   for purposes of liquidating assets in a reorganization subject 
 29.6   to the following conditions: 
 29.7      (1) the subsidiary must be a bank holding company whose 
 29.8   assets and liabilities and subsidiary bank control have been 
 29.9   removed; and 
 29.10     (2) the operations of the subsidiary must be limited to the 
 29.11  time period reasonably related to the completion of the 
 29.12  reorganization. 
 29.13     Sec. 32.  Minnesota Statutes 1996, section 49.215, 
 29.14  subdivision 3, is amended to read: 
 29.15     Subd. 3.  [CERTIFICATE OF LIQUIDATION.] Upon compliance 
 29.16  with the foregoing and upon filing with the commissioner an 
 29.17  affidavit of the president and cashier or vice president 
 29.18  conducting the duties of cashier of said financial institution 
 29.19  that the provisions of subdivision 4 have been complied with and 
 29.20  that all depositors and other creditors have been paid in full, 
 29.21  or, if any dividends or any moneys set apart for the payment of 
 29.22  claims remain unpaid and the places of residence of the 
 29.23  depositors or other creditors are unknown to the persons making 
 29.24  the affidavit, that sufficient funds have been turned over to 
 29.25  the commissioner for payment into the state treasury to pay said 
 29.26  depositors and other creditors, in the manner provided by 
 29.27  subdivision 5, the commissioner shall issue a certificate of 
 29.28  liquidation, and, upon the filing for record of said certificate 
 29.29  of liquidation in the office of the secretary of state and in 
 29.30  the office of the county recorder of the county of the principal 
 29.31  place of business of such financial institution immediately 
 29.32  prior to its voluntary liquidation, the liquidation of said 
 29.33  financial institution shall be complete, and its corporate 
 29.34  existence shall thereupon terminate.  
 29.35     Sec. 33.  Minnesota Statutes 1996, section 49.33, is 
 29.36  amended to read: 
 30.1      49.33 [CONSOLIDATION AND MERGER, WHEN AUTHORIZED.] 
 30.2      Subject to the provisions of sections 49.33 to 49.41, with 
 30.3   the written consent of the commissioner of commerce, any bank of 
 30.4   discount and deposit, savings bank, or trust company may effect 
 30.5   a transfer of its assets and liabilities to another bank, 
 30.6   savings bank, or trust company for the purpose of consolidating 
 30.7   or merging, but the same shall be without prejudice to the 
 30.8   creditors of either.  
 30.9      Sec. 34.  Minnesota Statutes 1996, section 49.36, 
 30.10  subdivision 4, is amended to read: 
 30.11     Subd. 4.  [NOTICE OF PROPOSED ACQUISITION.] The successor 
 30.12  bank shall give reasonable notice of the acquisition to each of 
 30.13  the depositors and creditors of an acquired bank or savings 
 30.14  association within 30 days after the order is activated at a 
 30.15  time and in a form determined in the discretion of the 
 30.16  commissioner.  This notice may be coordinated to include federal 
 30.17  regulator concerns for impact on depositors insurance of 
 30.18  accounts and information designed to alert depositors and 
 30.19  creditors of any changes in procedures or practices.  If 
 30.20  detached facilities are to be closed as a result of transactions 
 30.21  authorized by this section, adequate notice shall be provided by 
 30.22  the bank prior to closing, unless the commissioner has acted to 
 30.23  prevent the probable failure of the bank or savings association, 
 30.24  and then as soon as practicable after the acquisition date. 
 30.25     Sec. 35.  Minnesota Statutes 1996, section 49.42, is 
 30.26  amended to read: 
 30.27     49.42 [STATE BANK.] 
 30.28     As used in sections 49.42 to 49.46: 
 30.29     "State bank" means any bank, savings bank, trust company, 
 30.30  or bank and trust company which is now or may hereafter be 
 30.31  organized under the laws of this state.  
 30.32     "National banking association" means a bank, savings bank, 
 30.33  bank and trust company, or bank exclusively exercising trust 
 30.34  powers organized under the laws of the United States. 
 30.35     Sec. 36.  Minnesota Statutes 1996, section 50.245, is 
 30.36  amended to read: 
 31.1      50.245 [BRANCHES; ACQUISITIONS.] 
 31.2      Subdivision 1.  [AUTHORITY FOR BRANCH OFFICES.] A savings 
 31.3   bank may establish any number of detached facilities as may be 
 31.4   approved by the commissioner of commerce pursuant to sections 
 31.5   47.51 to 47.57.  The savings bank shall not change the location 
 31.6   of a detached facility without prior written approval of the 
 31.7   commissioner of commerce.  A savings bank may establish a loan 
 31.8   production office, without restriction as to geographical 
 31.9   location, upon written notice to the commissioner of commerce. 
 31.10     Subd. 2.  [AUTHORITY FOR BRANCH OFFICES IN OTHER STATES.] 
 31.11  The authorization contained in subdivision 1 is in addition to 
 31.12  the authority granted savings banks in section 47.52.  A savings 
 31.13  bank chartered in this state, whether or not the subsidiary of a 
 31.14  savings bank holding company, may, by acquisition, merger, 
 31.15  purchase, and assumption of some or all assets and liabilities, 
 31.16  consolidation, or de novo formation, establish or operate 
 31.17  detached facilities in another state on the same terms and 
 31.18  conditions and subject to the same limitations and restrictions 
 31.19  as are applicable to the establishment of branches by national 
 31.20  banks located in Minnesota, except that approval of the 
 31.21  comptroller of the currency shall not be required for such 
 31.22  detached facilities has the same authority as a bank to conduct 
 31.23  interstate mergers affecting interstate branching under section 
 31.24  49.411.  The merger may be between banks and with other banks or 
 31.25  savings banks. 
 31.26     Subd. 3.  [RECIPROCATING STATE INTERSTATE ACQUISITIONS.] A 
 31.27  savings bank chartered in this state and a savings bank holding 
 31.28  company with its principal offices in this state may acquire 
 31.29  control of a financial institution chartered in a reciprocating 
 31.30  state or, subject to applicable federal law, any other state or 
 31.31  a financial institution holding company with principal offices 
 31.32  in a reciprocating state or, subject to applicable federal law, 
 31.33  any other state.  A savings bank chartered in a reciprocating 
 31.34  state or, subject to applicable federal law, any other state and 
 31.35  a savings bank holding company with principal offices in a 
 31.36  reciprocating state or, subject to applicable federal law, any 
 32.1   other state may acquire control of a savings bank chartered in 
 32.2   this state or a savings bank holding company with principal 
 32.3   offices in this state.  
 32.4      Subd. 4.  [PROCEDURAL REQUIREMENTS.] Procedural 
 32.5   requirements equivalent to those contained in sections 48.90 to 
 32.6   48.995 48.99 apply to reciprocal interstate branching and 
 32.7   acquisitions by savings banks and savings bank holding companies.
 32.8      Subd. 5.  [DEFINITIONS.] For the purpose of this section, 
 32.9   the terms defined in this subdivision have the meanings given 
 32.10  them. 
 32.11     (a) "Financial institution" means a bank, savings bank, 
 32.12  savings association, or trust company, or credit union, whether 
 32.13  chartered under the laws of this state, another state or 
 32.14  territory, or under the laws of the United States. 
 32.15     (b) "Loan production office" means a place of business at 
 32.16  which a savings bank provides lending if the loans are approved 
 32.17  at the main office or detached facility of the savings bank, but 
 32.18  at which a savings bank may not accept deposits except through a 
 32.19  remote service unit. 
 32.20     (c) "Reciprocating state" means a state that authorizes the 
 32.21  acquisition of control of financial institutions chartered in 
 32.22  that state and financial institution holding companies with 
 32.23  principal offices in that state by a savings bank chartered in 
 32.24  this state or savings bank holding company with principal 
 32.25  offices in this state under conditions substantially similar to 
 32.26  those imposed by the laws of Minnesota, as determined by the 
 32.27  commissioner of commerce. 
 32.28     (d) "Remote service unit" means an electronic financial 
 32.29  terminal as defined in section 47.61. 
 32.30     Subd. 6.  [COMMISSIONER'S AUTHORITY.] The authority of the 
 32.31  commissioner of commerce to approve a transaction under this 
 32.32  section is in addition to that provided for in section 49.48. 
 32.33     Sec. 37.  Minnesota Statutes 1996, section 51A.38, 
 32.34  subdivision 1, is amended to read: 
 32.35     Subdivision 1.  [GENERALLY.] Real estate loans and other 
 32.36  loans secured by a mortgage on real estate that are eligible for 
 33.1   investment by an association under sections 51A.01 to 51A.57 may 
 33.2   be written according to this section and section 
 33.3   51A.385 51A.386, or upon any other plan approved by the 
 33.4   commissioner.  
 33.5      Sec. 38.  Minnesota Statutes 1996, section 52.04, 
 33.6   subdivision 2a, is amended to read: 
 33.7      Subd. 2a.  [CREDIT SALES OR SERVICE CONTRACTS.] A person 
 33.8   may enter into a credit sale or service contract for sale to a 
 33.9   state or federal credit union doing business in this state, and 
 33.10  a credit union may purchase and enforce the contract under the 
 33.11  terms and conditions set forth in section 47.59, subdivisions 
 33.12  4 and 6 to 14. 
 33.13     Sec. 39.  Minnesota Statutes 1996, section 52.04, is 
 33.14  amended by adding a subdivision to read: 
 33.15     Subd. 3.  [COMPARABILITY WITH FEDERAL CREDIT UNIONS.] The 
 33.16  commissioner of commerce may authorize credit union activity in 
 33.17  which credit unions subject to the jurisdiction of the federal 
 33.18  government may be authorized to engage by federal legislation, 
 33.19  ruling, or regulation.  The commissioner may not authorize state 
 33.20  credit unions subject to this chapter to engage in credit union 
 33.21  activity prohibited by the laws of this state. 
 33.22     Sec. 40.  Minnesota Statutes 1996, section 52.062, 
 33.23  subdivision 1, is amended to read: 
 33.24     Subdivision 1.  [REASONS FOR COMMISSIONER'S ACTION.] 
 33.25  Whenever the commissioner of commerce shall find that a credit 
 33.26  union is engaged in unsafe or unsound practices in conducting 
 33.27  its business or that the shares of the members are impaired or 
 33.28  are in immediate danger of becoming impaired, or that such 
 33.29  credit union has knowingly or negligently permitted any of its 
 33.30  officers, directors, committee members, or employees to violate 
 33.31  any material provision of any law, bylaw, or rule to which the 
 33.32  credit union is subject, the commissioner of commerce may 
 33.33  proceed in the manner provided by either subdivision 2 or, 3, or 
 33.34  4. 
 33.35     Sec. 41.  Minnesota Statutes 1996, section 52.062, is 
 33.36  amended by adding a subdivision to read: 
 34.1      Subd. 4.  [CONSENT CEASE AND DESIST ORDER.] In lieu of 
 34.2   suspension of the operation of the credit union, the 
 34.3   commissioner of commerce and the board of directors of the 
 34.4   credit union may agree to execute a consent cease and desist 
 34.5   order in which the parties agree to waive the right to a hearing 
 34.6   and agree that the credit union shall cease and desist from 
 34.7   unsafe or unsound practices, or violations.  The order must 
 34.8   specify whether credit union operation may continue, and if 
 34.9   operation may continue, the conditions under which operation may 
 34.10  continue. 
 34.11     Sec. 42.  Minnesota Statutes 1996, section 52.063, is 
 34.12  amended to read: 
 34.13     52.063 [PROCEEDINGS FOLLOWING SUSPENSION OR, CONTINUATION 
 34.14  OF SUSPENSION, OR CONSENT CEASE AND DESIST ORDER; APPOINTMENT OF 
 34.15  NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] 
 34.16     Subdivision 1.  [PROCEEDINGS FOLLOWING SUSPENSION OR 
 34.17  CONTINUATION OF SUSPENSION.] Upon receipt of the suspension 
 34.18  notice or the notice of the continuation of suspension under 
 34.19  section 52.062, subdivision 2 or 3, the credit union shall 
 34.20  immediately cease or continue cessation of all operations except 
 34.21  those operations specifically authorized by the commissioner of 
 34.22  commerce.  If the notice is given pursuant to determination by 
 34.23  the commissioner of commerce after a hearing, the board of 
 34.24  directors shall have 60 days from the receipt of said notice in 
 34.25  which to file with the commissioner of commerce a proposed plan 
 34.26  of corrective actions or to request that a receiver be appointed 
 34.27  for the credit union.  The commissioner of commerce shall have 
 34.28  30 days from the receipt of the proposed plan of corrective 
 34.29  actions to determine if the proposed corrective actions are 
 34.30  sufficient to correct the deficiencies which formed the basis 
 34.31  for the suspension.  If the commissioner of commerce determines 
 34.32  that the proposed corrective actions are sufficient, the 
 34.33  suspension shall be lifted and the credit union returned to 
 34.34  normal operations under its board of directors.  If the 
 34.35  commissioner of commerce believes the proposed corrective 
 34.36  actions insufficient, or if the board has failed to answer the 
 35.1   suspension notice, or has requested that a receiver be 
 35.2   appointed, then the commissioner of commerce shall apply to the 
 35.3   district court for appointment of a receiver.  The credit union 
 35.4   shall have the right, within six months of the receipt of any 
 35.5   notice of suspension or continuation of suspension pursuant to a 
 35.6   determination by the commissioner of commerce after hearing, to 
 35.7   appeal to the district court for a ruling as to the validity of 
 35.8   such notice.  
 35.9      Subd. 2.  [PROCEEDINGS FOLLOWING CONSENT CEASE AND DESIST 
 35.10  ORDER.] If the commissioner of commerce and the board of 
 35.11  directors of the credit union execute a consent cease and desist 
 35.12  order in lieu of a suspension under section 52.062, subdivision 
 35.13  4, the board of directors of the credit union may request that 
 35.14  the commissioner of commerce seek court appointment of a 
 35.15  receiver for the credit union.  The consent cease and desist 
 35.16  order must state that the credit union has requested that the 
 35.17  commissioner seek appointment of a receiver. 
 35.18     Subd. 3.  [APPOINTMENT OF NATIONAL CREDIT UNION 
 35.19  ADMINISTRATION BOARD AS RECEIVER.] Upon a request by the 
 35.20  commissioner of commerce, the court may appoint the National 
 35.21  Credit Union Administration Board, created by section 3 of the 
 35.22  Federal Credit Union Act, as amended, as receiver of a credit 
 35.23  union, without bond, when the deposits of the credit union are 
 35.24  to any extent insured by the National Credit Union 
 35.25  Administration Board, and the credit union has had its 
 35.26  operations suspended or has executed a consent cease and desist 
 35.27  order with the commissioner in lieu of a suspension under 
 35.28  section 52.062.  Notwithstanding any other provisions of law, 
 35.29  the commissioner of commerce may, in the event of the suspension 
 35.30  or consent cease and desist order, tender to the National Credit 
 35.31  Union Administration Board the proposed appointment as receiver 
 35.32  of the credit union.  If the National Credit Union 
 35.33  Administration Board accepts the proposed appointment and the 
 35.34  court appoints the National Credit Union Administration Board as 
 35.35  receiver upon a request by the commissioner, the National Credit 
 35.36  Union Administration Board shall have and possess all the powers 
 36.1   and privileges provided by the laws of this state and section 
 36.2   207 of the Federal Credit Union Act, as amended, with respect to 
 36.3   a receiver of a credit union, the board of directors of the 
 36.4   credit union, and its members. 
 36.5      Sec. 43.  Minnesota Statutes 1996, section 52.064, is 
 36.6   amended by adding a subdivision to read: 
 36.7      Subd. 3.  [WAIVER WHEN CREDIT UNION REQUESTS APPOINTMENT OF 
 36.8   NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] If the 
 36.9   board of directors of the credit union has made a request to the 
 36.10  commissioner of commerce to seek court appointment of the 
 36.11  National Credit Union Administration Board as its receiver, and 
 36.12  the commissioner elects to seek this appointment, then the board 
 36.13  of directors of the credit union may waive the right to apply to 
 36.14  the court for permission to file, and the right to file, a plan 
 36.15  of reorganization, merger, or consolidation for the credit union 
 36.16  within 90 days of the appointment of the receiver under 
 36.17  subdivision 1.  The board of directors of the credit union may 
 36.18  waive this right on behalf of itself, and on behalf of the 
 36.19  members of the credit union, when the board of directors of the 
 36.20  credit union determines that such action is in the best 
 36.21  interests of the credit union and its members, so that the 
 36.22  deposit insurer may proceed expeditiously to wind up the affairs 
 36.23  of the credit union upon appointment as receiver. 
 36.24     Sec. 44.  Minnesota Statutes 1996, section 52.13, is 
 36.25  amended to read: 
 36.26     52.13 [DEPOSITS IN NAME OF MINOR.] 
 36.27     Any deposit made in the name of a minor, or shares issued 
 36.28  in a minor's name, shall be held for the exclusive right and 
 36.29  benefit of the minor, free from the control or lien of all other 
 36.30  persons except creditors, and together with the dividends or 
 36.31  interest thereon shall be paid to the minor; and the minor's 
 36.32  receipt, check, or acquittance in any form shall be a sufficient 
 36.33  release and discharge of the depository for the deposits or 
 36.34  shares, or any part thereof, until a conservator or guardian 
 36.35  appointed for the minor shall have delivered a certificate of 
 36.36  appointment to the depository.  Deposits may be accepted 
 37.1   pursuant to the authority set forth in chapter 527, provided 
 37.2   that either the custodian or the minor is a member of the credit 
 37.3   union accepting the deposit. 
 37.4      Sec. 45.  Minnesota Statutes 1996, section 52.201, is 
 37.5   amended to read: 
 37.6      52.201 [REORGANIZING FEDERAL CREDIT UNION INTO STATE CREDIT 
 37.7   UNION.] 
 37.8      When any federal credit union authorized to convert to a 
 37.9   state charter has taken the necessary steps under the federal 
 37.10  law for that purpose, seven or more members, upon authority of 
 37.11  two-thirds of the members present and entitled to vote and who 
 37.12  shall have voted for such conversion at a regular or special 
 37.13  meeting upon 14 days mailed written notice to each member at the 
 37.14  member's last known address clearly stating that such conversion 
 37.15  is to be acted upon, and upon approval of the commissioner of 
 37.16  commerce, may execute a certificate of incorporation under the 
 37.17  provisions of the state credit union act, which, in addition to 
 37.18  the other requirements of law, shall state the authority derived 
 37.19  from the shareholders of such federal credit union; and upon 
 37.20  recording such certificate as required by law, it shall become a 
 37.21  legal state credit union and the members of the federal credit 
 37.22  union shall without further action be members of the state 
 37.23  credit union.  This includes members of the federal credit union 
 37.24  on the basis of acceptance of small employer groups provided the 
 37.25  commissioner may require contemporaneous filing of applications 
 37.26  under section 52.05, subdivision 2.  Thereupon the assets of the 
 37.27  federal credit union, subject to its liabilities not liquidated 
 37.28  under the federal law before such incorporation, shall vest in 
 37.29  and become the property of such state credit union and the 
 37.30  members upon request shall be entitled to a new passbook showing 
 37.31  existing share and loan balances.  The commissioner of commerce 
 37.32  shall approve or disapprove of the conversion within 60 days of 
 37.33  the date the proposal is presented.  
 37.34     Sec. 46.  Minnesota Statutes 1996, section 53.04, is 
 37.35  amended by adding a subdivision to read: 
 37.36     Subd. 5b.  [NEGOTIABLE ORDER OF WITHDRAWAL 
 38.1   ACCOUNTS.] Notwithstanding section 53.05, clause (1), and 
 38.2   consistent with United States Code, title 12, section 1832, 
 38.3   issue negotiable order of withdrawal accounts, which may not be 
 38.4   referred to as checking accounts and may include the following 
 38.5   transactions: 
 38.6      (1) automatic (preauthorized) transfers for the purpose of 
 38.7   paying loans at the same institution; 
 38.8      (2) transfers or withdrawals made by mail, messenger, 
 38.9   automated teller machine, or in person as withdrawals or 
 38.10  transfers to another account of the depositor at the same 
 38.11  institution; 
 38.12     (3) withdrawals initiated by telephone and consummated by 
 38.13  an official check mailed to the depository; 
 38.14     (4) automated clearinghouse debits; 
 38.15     (5) transfers from a customer's account under a 
 38.16  preauthorized agreement to cover overdrafts on another 
 38.17  transaction account; 
 38.18     (6) drafts payable to third parties; and 
 38.19     (7) debit card transactions. 
 38.20     Agreements establishing negotiable order of withdrawal 
 38.21  accounts must include a prominent disclosure of the following: 
 38.22     "We reserve the right to at any time require not less than 
 38.23  seven days' notice in writing before each withdrawal from this 
 38.24  account." 
 38.25     A negotiable order of withdrawal account may be with or 
 38.26  without interest and is considered a transaction account for 
 38.27  purposes of section 48.512. 
 38.28     Before exercising this power, the company must submit a 
 38.29  plan to the commissioner detailing implementation of the power. 
 38.30     Sec. 47.  Minnesota Statutes 1996, section 53.05, is 
 38.31  amended to read: 
 38.32     53.05 [POWERS, LIMITATION.] 
 38.33     No industrial loan and thrift company may do any of the 
 38.34  following: 
 38.35     (1) carry demand banking accounts; use the word "savings" 
 38.36  unless the institution's investment certificates, savings 
 39.1   accounts, and savings deposits are insured by the Federal 
 39.2   Deposit Insurance Corporation and then only if the word is not 
 39.3   followed by the words "and loan" in its corporate name; use the 
 39.4   word "bank" or "banking" in its corporate name; operate as a 
 39.5   savings bank; 
 39.6      (2) have outstanding at any one time certificates of 
 39.7   indebtedness, savings accounts, and savings deposits 30 times 
 39.8   the sum of capital stock and surplus of the company; 
 39.9      (3) accept trusts, except as provided in section 47.75, 
 39.10  subdivision 1, or act as guardian, administrator, or judicial 
 39.11  trustee in any form; 
 39.12     (4) deposit any of its funds in any banking corporation, 
 39.13  unless that corporation has been designated by vote of a 
 39.14  majority of directors or of the executive committee present at a 
 39.15  meeting duly called, at which a quorum was in attendance; 
 39.16     (5) change any allocation of capital made pursuant to 
 39.17  section 53.03 or reduce or withdraw in any way any portion of 
 39.18  the capital stock and surplus without prior written approval of 
 39.19  the commissioner of commerce; 
 39.20     (6) take any instrument in which blanks are left to be 
 39.21  filled in after execution; 
 39.22     (7) lend money in excess of 20 percent of the total of its 
 39.23  capital stock and surplus at all its authorized locations to a 
 39.24  person primarily liable.  Companies not issuing investment 
 39.25  certificates of indebtedness under section 53.04 need not comply 
 39.26  with the requirement if the amount of money lent does not exceed 
 39.27  $100,000 of principal as defined by section 47.59, subdivision 
 39.28  1, paragraph (p).  
 39.29     However, industrial loan and thrift companies with deposit 
 39.30  liabilities must comply with the provisions of section 48.24; or 
 39.31     (8) issue cashier's checks pursuant to section 48.151, 
 39.32  unless and at all times the aggregate liability to all creditors 
 39.33  on these instruments is protected by a special fund in cash or 
 39.34  due from banks to be used solely for payment of the cashier's 
 39.35  checks. 
 39.36     Sec. 48.  Minnesota Statutes 1996, section 53.09, 
 40.1   subdivision 2a, is amended to read: 
 40.2      Subd. 2a.  [COMPLIANCE EXAMINATIONS.] For the purpose of 
 40.3   discovering violations of this chapter or securing information 
 40.4   lawfully required by the commissioner under this chapter, the 
 40.5   commissioner may, at any time, either personally or by a person 
 40.6   or persons duly designated, investigate the loans and business, 
 40.7   and examine the books, accounts, records, and files used in the 
 40.8   business, of every licensee and of every person engaged in the 
 40.9   business whether or not the person acts or claims to act as 
 40.10  principal or agent, or under the authority of this chapter.  For 
 40.11  the purposes of this subdivision, the commissioner and duly 
 40.12  designated representatives have free access to the offices and 
 40.13  places of business, books, accounts, papers, records, files, 
 40.14  safes, and vaults of all these persons.  The commissioner and 
 40.15  all persons duly designated may require the attendance of and 
 40.16  examine, under oath, all persons whose testimony the 
 40.17  commissioner may require relative to the loans or business or to 
 40.18  the subject matter of an examination, investigation, or 
 40.19  hearing.  Upon written agreement with the company, the 
 40.20  commissioner may conduct examinations applying the procedures 
 40.21  for purposes of subdivision 1, and section 46.04, subdivision 1, 
 40.22  to facilitate the qualifications of the company to participate 
 40.23  in the United States Small Business Administration loan 
 40.24  guarantee or similar programs. 
 40.25     Each licensee shall pay to the commissioner the amount 
 40.26  required under section 46.131, and the commissioner may maintain 
 40.27  an action for the recovery of the costs in a court of competent 
 40.28  jurisdiction. 
 40.29     Sec. 49.  Minnesota Statutes 1996, section 55.06, 
 40.30  subdivision 1, is amended to read: 
 40.31     Subdivision 1. [PROHIBITION.] No person except a bank, a 
 40.32  savings bank, a credit union, a savings association, industrial 
 40.33  loan and thrift company issuing investment certificates of 
 40.34  indebtedness, or a trust company may let out or rent as lessor, 
 40.35  for hire, safe deposit boxes or take or receive valuable 
 40.36  personal property for safekeeping and storage, as bailee, for 
 41.1   hire, without procuring a license and giving a bond, as required 
 41.2   by this chapter, except as otherwise authorized by law so to do. 
 41.3      Sec. 50.  Minnesota Statutes 1996, section 56.07, is 
 41.4   amended to read: 
 41.5      56.07 [CONTROL OVER LOCATION.] 
 41.6      Subdivision 1.  [GENERAL.] Not more than one place of 
 41.7   business shall be maintained under the same license, but the 
 41.8   commissioner may issue more than one license to the same 
 41.9   licensee upon compliance with all the provisions of this chapter 
 41.10  governing an original issuance of a license, for each such new 
 41.11  license.  To the extent that previously filed applicable 
 41.12  information remains substantially unchanged, the applicant need 
 41.13  not refile this information, unless requested. 
 41.14     When a licensee shall wish to change a place of business, 
 41.15  the licensee shall give written notice thereof 30 days in 
 41.16  advance to the commissioner, who shall within 30 days of receipt 
 41.17  of such notice, issue an amended license approving the change.  
 41.18  No change in the place of business of a licensee to a location 
 41.19  outside of its current trade area or more than 25 miles from its 
 41.20  present location, whichever distance is greater, shall be 
 41.21  permitted under the same license unless all of the requirements 
 41.22  of section 56.04 have been met.  
 41.23     A licensed place of business shall be open during regular 
 41.24  business hours each weekday, except for legal holidays and for 
 41.25  any weekday the commissioner grants approval to the licensee to 
 41.26  remain closed.  A licensed place of business may be open on 
 41.27  Saturday, but shall be closed on Sunday.  A licensed location 
 41.28  must be open for business and examination purposes on a schedule 
 41.29  provided to and approved by the commissioner.  This schedule of 
 41.30  regular business must be conspicuously posted at the licensed 
 41.31  location. 
 41.32     Subd. 2.  [INTERACTIVE KIOSK LOCATIONS.] Licensed locations 
 41.33  providing limited services on an interactive telephone-customer 
 41.34  service communications terminal are required to comply with 
 41.35  paragraphs (a) to (c). 
 41.36     (a) The licensee must maintain business books, accounts, 
 42.1   and records on a suitable alternative system of maintenance 
 42.2   approved by the commissioner. 
 42.3      (b) The license required to be posted under section 56.05 
 42.4   may be displayed on the customer service communications terminal 
 42.5   screen for a period of no less than 15 seconds. 
 42.6      (c) The full and accurate schedule of charges required by 
 42.7   section 56.14, clause (5), may be displayed on the customer 
 42.8   service communications terminal screen for no less than 20 
 42.9   seconds. 
 42.10     Sec. 51.  Minnesota Statutes 1996, section 56.10, 
 42.11  subdivision 1, is amended to read: 
 42.12     Subdivision 1.  For the purpose of discovering violations 
 42.13  of this chapter or securing information lawfully required by the 
 42.14  commissioner hereunder, the commissioner may, at any time, 
 42.15  either personally or by a person or persons duly designated, 
 42.16  investigate the loans and business and examine the books, 
 42.17  accounts, records, and files used therein, of every licensee and 
 42.18  of every person who shall be engaged in the business described 
 42.19  in section 56.01, whether the person shall act or claim to act 
 42.20  as principal or agent, or under or without the authority of this 
 42.21  chapter.  For that purpose the commissioner and a duly 
 42.22  designated representative shall have free access to the offices 
 42.23  and places of business, books, accounts, papers, records, files, 
 42.24  safes, and vaults of all such persons.  The commissioner and all 
 42.25  persons duly designated shall have authority to require the 
 42.26  attendance of and to examine, under oath, all persons whomsoever 
 42.27  whose testimony the commissioner may require relative to the 
 42.28  loan or the business or to the subject matter of any 
 42.29  examination, investigation, or hearing.  Upon written agreement 
 42.30  with the licensee, the commissioner may conduct examinations 
 42.31  applying the procedures for purposes of this subdivision and 
 42.32  section 46.04, subdivision 1, to facilitate the qualifications 
 42.33  of the licensee to participate in the United States Small 
 42.34  Business Administration loan guarantee or similar programs. 
 42.35     Each licensee shall pay to the commissioner such amount as 
 42.36  may be required under section 46.131, and the commissioner may 
 43.1   maintain an action for the recovery of such costs in any court 
 43.2   of competent jurisdiction. 
 43.3      Sec. 52.  Minnesota Statutes 1996, section 56.131, 
 43.4   subdivision 1, is amended to read: 
 43.5      Subdivision 1.  [INTEREST RATES AND CHARGES.] (a) On any 
 43.6   loan in a principal amount not exceeding $56,000 $100,000 or 15 
 43.7   percent of a Minnesota corporate licensee's capital stock and 
 43.8   surplus as defined in section 53.015, if greater, a licensee may 
 43.9   contract for and receive interest, finance charges, and other 
 43.10  charges as provided in section 47.59. 
 43.11     (b) Loans may be interest-bearing or precomputed. 
 43.12     (c) Notwithstanding section 47.59 to the contrary, to 
 43.13  compute time on interest-bearing and precomputed loans, 
 43.14  including, but not limited to the calculation of interest, a day 
 43.15  is considered 1/30 of a month when calculation is made for a 
 43.16  fraction of a calendar month.  A year is 12 calendar months.  A 
 43.17  calendar month is that period from a given date in one month to 
 43.18  the same numbered date in the following month, and if there is 
 43.19  no same numbered date, to the last day of the following month.  
 43.20  When a period of time includes a whole month and a fraction of a 
 43.21  month, the fraction of a month is considered to follow the whole 
 43.22  month.  
 43.23     In the alternative, for interest-bearing loans, a licensee 
 43.24  may charge interest at the rate of 1/365 of the agreed annual 
 43.25  rate for each actual day elapsed.  
 43.26     (d) With respect to interest-bearing loans and 
 43.27  notwithstanding section 47.59: 
 43.28     (1) Interest must be computed on unpaid principal balances 
 43.29  outstanding from time to time, for the time outstanding.  Each 
 43.30  payment must be applied first to the accumulated interest and 
 43.31  the remainder of the payment applied to the unpaid principal 
 43.32  balance; provided however, that if the amount of the payment is 
 43.33  insufficient to pay the accumulated interest, the unpaid 
 43.34  interest continues to accumulate to be paid from the proceeds of 
 43.35  subsequent payments and is not added to the principal balance. 
 43.36     (2) Interest must not be payable in advance or compounded.  
 44.1   However, if part or all of the consideration for a new loan 
 44.2   contract is the unpaid principal balance of a prior loan, then 
 44.3   the principal amount payable under the new loan contract may 
 44.4   include any unpaid interest which has accrued.  The unpaid 
 44.5   principal balance of a precomputed loan is the balance due after 
 44.6   refund or credit of unearned interest as provided in paragraph 
 44.7   (e), clause (3).  The resulting loan contract is deemed a new 
 44.8   and separate loan transaction for all purposes. 
 44.9      (e) With respect to precomputed loans and notwithstanding 
 44.10  section 47.59 to the contrary: 
 44.11     (1) Loans must be repayable in substantially equal and 
 44.12  consecutive monthly installments of principal and interest 
 44.13  combined, except that the first installment period may be more 
 44.14  or less than one month by not more than 15 days, and the first 
 44.15  installment payment amount may be larger than the remaining 
 44.16  payments by the amount of interest charged for the extra days 
 44.17  and must be reduced by the amount of interest for the number of 
 44.18  days less than one month to the first installment payment; and 
 44.19  monthly installment payment dates may be omitted to accommodate 
 44.20  borrowers with seasonal income. 
 44.21     (2) Payments may be applied to the combined total of 
 44.22  principal and precomputed interest until the loan is fully 
 44.23  paid.  Payments must be applied in the order in which they 
 44.24  become due. 
 44.25     (3) If the maturity of the loan is accelerated for any 
 44.26  reason and judgment is entered, the licensee shall credit the 
 44.27  borrower with the same refund as if prepayment in full had been 
 44.28  made on the date the judgment is entered. 
 44.29     (4) If two or more installments are delinquent one full 
 44.30  month or more on any due date, and if the contract so provides, 
 44.31  the licensee may reduce the unpaid balance by the refund credit 
 44.32  which would be required for prepayment in full on the due date 
 44.33  of the most recent maturing installment in default.  Thereafter, 
 44.34  and in lieu of any other default or deferment charges, the 
 44.35  single annual percentage rate permitted by this subdivision may 
 44.36  be charged on the unpaid balance until fully paid. 
 45.1      (5) Following the final installment as originally scheduled 
 45.2   or deferred, the licensee, for any loan contract which has not 
 45.3   previously been converted to interest-bearing under 
 45.4   clause (4) (7), may charge interest on any balance remaining 
 45.5   unpaid, including unpaid default or deferment charges, at the 
 45.6   single annual percentage rate permitted by this subdivision 
 45.7   until fully paid.  
 45.8      (6) (5) With respect to a loan secured by an interest in 
 45.9   real estate, and having a maturity of more than 60 months, the 
 45.10  original schedule of installment payments must fully amortize 
 45.11  the principal and interest on the loan.  The original schedule 
 45.12  of installment payments for any other loan secured by an 
 45.13  interest in real estate must provide for payment amounts that 
 45.14  are sufficient to pay all interest scheduled to be due on the 
 45.15  loan. 
 45.16     (6) A delinquency charge as provided for in section 47.59, 
 45.17  subdivision 6, paragraph (a), clause (4). 
 45.18     (7) Grant extensions, deferments, or conversions to 
 45.19  interest-bearing as provided in section 47.59, subdivision 5. 
 45.20     Sec. 53.  Minnesota Statutes 1996, section 56.131, 
 45.21  subdivision 4, is amended to read: 
 45.22     Subd. 4.  [ADJUSTMENT OF DOLLAR AMOUNTS.] The dollar 
 45.23  amounts in this section subdivisions 2 and 6, sections 53.04, 
 45.24  subdivision 3a, paragraph (c), 56.01, 56.12, and 56.125 shall 
 45.25  change periodically, as provided in section 47.59, subdivision 3.
 45.26     Sec. 54.  Minnesota Statutes 1996, section 59A.08, 
 45.27  subdivision 3, is amended to read: 
 45.28     Subd. 3.  The information required by subdivision 1 shall 
 45.29  only be required in the initial insurance premium finance 
 45.30  agreement entered into if said agreement is open end.  An 
 45.31  insurance premium finance agreement is open end if it provides 
 45.32  that additional or subsequent insurance premiums may be financed 
 45.33  and added to the initial insurance premium finance agreement 
 45.34  from time to time.  
 45.35     Additional or subsequent premiums may be added to an open 
 45.36  end insurance premium finance agreement from time to time, 
 46.1   provided that: 
 46.2      (a) The additional or subsequent insurance premium to be 
 46.3   added results from additional premiums required under policies 
 46.4   presently being financed under the open end insurance premium 
 46.5   finance agreement or from a renewal of a policy or from other 
 46.6   policies owned or purchased by the insured.  
 46.7      (b) The insurance premium finance company receives written 
 46.8   notice or advice from an insurer authorized to do business in 
 46.9   this state or from an insurance agent licensed in this state 
 46.10  acknowledging that the premium on an existing financed policy 
 46.11  has been increased or that a policy has been renewed or that 
 46.12  additional policies have or will be issued to the insured.  The 
 46.13  notice or advice shall contain the amount of the additional 
 46.14  premium, the down payment collected by the insurer or agent, if 
 46.15  any, and the amount of premium to be added to the open end 
 46.16  insurance premium finance agreement.  
 46.17     (c) If the additional premiums to be added to the open end 
 46.18  insurance premium finance agreement result from additional 
 46.19  premiums required on policies presently financed under the 
 46.20  agreement which are to be financed beyond the scheduled maturity 
 46.21  of the original financing, the renewal of a policy or from an 
 46.22  additional policy owned or purchased by the insured, the 
 46.23  insurance premium finance company shall mail a notice to the 
 46.24  insured at the address shown in the policy.  Said notice shall 
 46.25  contain: 
 46.26     (1) The information required by subdivision 1, 
 46.27  notwithstanding that the notice is not signed by, nor on behalf 
 46.28  of the insured; 
 46.29     (2) A conspicuous statement to the insured stating that the 
 46.30  insured may tender the premiums in full or disaffirm the 
 46.31  financing of the premium on the renewal or additional policies 
 46.32  by mailing to the insurance premium finance company notice of 
 46.33  intention to do so within ten days after the insurance premium 
 46.34  finance company mails to the insured the notice required by this 
 46.35  subdivision; 
 46.36     (3) A conspicuous statement to the insured that the 
 47.1   insurance premium finance company may, in event of default in 
 47.2   payment of the additional premium, or any installment thereof, 
 47.3   cause the insured's insurance contract or contracts to be 
 47.4   canceled as provided in section 59A.11.  
 47.5      (d) At the time the notice of additional premium to be 
 47.6   added to the open end insurance premium finance agreement is 
 47.7   mailed to the insured as provided in clause (c), an employee of 
 47.8   the insurance premium finance company shall prepare and sign a 
 47.9   certificate or affidavit of mailing setting forth the following: 
 47.10     (1) The name of the employee who mailed the notice of the 
 47.11  additional premium to be financed.  
 47.12     (2) That the employee mailing the notice is over 18 years 
 47.13  of age.  
 47.14     (3) The date and place of the deposit of the notice in the 
 47.15  mail.  
 47.16     (4) The name and address of the person to whom the notice 
 47.17  was mailed as shown on the envelope containing the notice.  
 47.18     (5) That the envelope containing the notice was sealed and 
 47.19  deposited in the mail with the proper postage thereon.  
 47.20     A certificate or affidavit of mailing, prepared and signed 
 47.21  as prescribed in this subdivision shall raise rebuttable 
 47.22  presumption that the notice was mailed to the insured at the 
 47.23  address shown in the certificate or affidavit of mailing.  
 47.24     (e) The insurance premium finance company may make a 
 47.25  finance charge in accordance with section 59A.09 for additional 
 47.26  premiums financed and added to an open end insurance premium 
 47.27  finance agreement; however, only one flat rate service fee may 
 47.28  be made or charged for each insurance premium finance agreement 
 47.29  entered into and no additional flat service fee may be made or 
 47.30  charged for adding additional or subsequent premiums to an open 
 47.31  end insurance premium finance agreement for which a flat service 
 47.32  fee was previously made or charged. or from a renewal of a 
 47.33  policy or from other policies owned or purchased by the insured, 
 47.34  a written notice must be mailed, faxed, or delivered to the 
 47.35  insured outlining any changes to the information required by 
 47.36  subdivision 1 along with a conspicuous statement to the insured 
 48.1   that the insured may tender the premiums in full or affirm the 
 48.2   proposed changes by tendering either an additional down payment 
 48.3   or tendering the proposed revised installment amount, or 
 48.4   disaffirm the financing of the additional premium by continuing 
 48.5   the original payment amount as agreed to in the initial 
 48.6   agreement.  
 48.7      If the proposed revisions in paragraph (c) are affirmed by 
 48.8   the insured, the finance company may make an additional finance 
 48.9   charge according to section 59A.09 for the additional premium 
 48.10  financed and added to the open-end agreement; however, no 
 48.11  additional flat service fee may be made or charged for adding 
 48.12  additional or subsequent premiums to an open-end insurance 
 48.13  premium finance agreement for which a flat service fee was 
 48.14  previously made or charged. 
 48.15     Sec. 55.  Minnesota Statutes 1996, section 59A.08, is 
 48.16  amended by adding a subdivision to read: 
 48.17     Subd. 5.  [COMPETITIVE EQUALITY.] No insurance agent, 
 48.18  insurance broker, or insurer may require a person to use a 
 48.19  particular insurance premium finance company or other 
 48.20  installment payment plan for which a finance charge or other fee 
 48.21  in connection with an installment payment has been or will be 
 48.22  imposed or refuse to accept premium payment from a company 
 48.23  licensed under sections 59A.01 to 59A.15. 
 48.24     Sec. 56.  Minnesota Statutes 1996, section 59A.11, 
 48.25  subdivision 2, is amended to read: 
 48.26     Subd. 2.  Not less than ten days' written notice shall be 
 48.27  mailed to the insured setting forth the intent of the insurance 
 48.28  premium finance company to cancel the insurance contract unless 
 48.29  the default is cured prior to the date stated in the notice.  
 48.30  The insurance agent or insurance broker indicated on the premium 
 48.31  finance agreement shall also be mailed given ten days' notice of 
 48.32  this action in a manner agreed upon between the insurance 
 48.33  premium finance company and insurance agent or insurance broker. 
 48.34     Sec. 57.  Minnesota Statutes 1996, section 59A.11, 
 48.35  subdivision 3, is amended to read: 
 48.36     Subd. 3.  (a) Pursuant to the power of attorney or other 
 49.1   authority referred to above, the insurance premium finance 
 49.2   company may cancel on behalf of the insured by mailing to the 
 49.3   insurer written notice stating when thereafter the cancellation 
 49.4   shall be effective, and the insurance contract shall be canceled 
 49.5   as if such notice of cancellation had been submitted by the 
 49.6   insured personally, but without requiring the return of the 
 49.7   insurance contract.  In the event that the insurer or its agent 
 49.8   does not provide the insurance premium finance company with a 
 49.9   specific mailing address for the purposes of receipt of the 
 49.10  above notice, then mailing by the insurance premium finance 
 49.11  company to the insurer at the address which is on file and of 
 49.12  record with the commissioner of commerce pursuant to the 
 49.13  provisions of chapters 60A and 72A shall be considered 
 49.14  sufficient notice under this section.  The notice requirements 
 49.15  of this paragraph only apply if an insurance premium finance 
 49.16  company and an insurer have not agreed on a method of providing 
 49.17  notice of cancellation. 
 49.18     (b) The insurance premium finance company shall also mail a 
 49.19  notice of cancellation to the insured at the insured's last 
 49.20  known address and.  
 49.21     (c) Written notice of the cancellation must also be given 
 49.22  to the insurance agent or insurance broker indicated on the 
 49.23  premium finance agreement.  Written notice to the insurance 
 49.24  agent or broker required by this paragraph may be given in a 
 49.25  manner agreed upon between the insurance premium finance 
 49.26  company, insurer, agent, or broker.  
 49.27     Sec. 58.  Minnesota Statutes 1996, section 62B.04, 
 49.28  subdivision 1, is amended to read: 
 49.29     Subdivision 1.  [CREDIT LIFE INSURANCE.] (1) The initial 
 49.30  amount of credit life insurance shall not exceed the amount of 
 49.31  principal repayable under the contract of indebtedness plus an 
 49.32  amount equal to one monthly payment.  Thereafter, if the 
 49.33  indebtedness is repayable in substantially equal installments 
 49.34  according to a predetermined schedule, the amount of insurance 
 49.35  on which the premium is calculated shall be equal to not exceed 
 49.36  the scheduled indebtedness plus one monthly payment or actual 
 50.1   amount of indebtedness, whichever is greater.  If the contract 
 50.2   of indebtedness provides for a variable rate of finance charge 
 50.3   or interest, the initial rate or the scheduled rates based on 
 50.4   the initial index must be used in determining the scheduled 
 50.5   amount of indebtedness and subsequent changes to the rate must 
 50.6   be disregarded in determining whether the contract is repayable 
 50.7   in substantially equal installments according to a predetermined 
 50.8   schedule. 
 50.9      (2) Notwithstanding clause (1), the amount of credit life 
 50.10  insurance written in connection with credit transactions 
 50.11  repayable over a specified term exceeding 63 months shall not 
 50.12  exceed the greater of:  (i) the actual amount of unpaid 
 50.13  indebtedness as it exists from time to time; or (ii) where an 
 50.14  indebtedness is repayable in substantially equal installments 
 50.15  according to a predetermined schedule, the scheduled amount of 
 50.16  unpaid indebtedness, less any unearned interest or finance 
 50.17  charges, plus an amount equal to two monthly payments.  If the 
 50.18  credit transaction provides for a variable rate of finance 
 50.19  charge or interest, the initial rate or the scheduled rates 
 50.20  based on the initial index must be used in determining the 
 50.21  scheduled amount of unpaid indebtedness and subsequent changes 
 50.22  in the rate must be disregarded in determining whether the 
 50.23  contract is repayable in substantially equal installments 
 50.24  according to a predetermined schedule. 
 50.25     (3) Notwithstanding clauses (1) and (2), insurance on 
 50.26  educational, agricultural, and horticultural credit transaction 
 50.27  commitments may be written on a nondecreasing or level term plan 
 50.28  for the amount of the loan commitment. 
 50.29     (4) If the contract of indebtedness provides for a variable 
 50.30  rate of finance charge or interest, the initial rate or the 
 50.31  scheduled rates based on the initial index shall be used in 
 50.32  determining the scheduled amount of indebtedness, and subsequent 
 50.33  changes to the rate shall be disregarded in determining whether 
 50.34  the contract is repayable in substantially equal installments 
 50.35  according to a predetermined schedule. 
 50.36     Sec. 59.  Minnesota Statutes 1996, section 300.20, 
 51.1   subdivision 2, is amended to read: 
 51.2      Subd. 2.  [VACANCIES.] If the certificate of incorporation 
 51.3   or the bylaws so provides, a vacancy in the board of directors 
 51.4   may be filled by the remaining directors.  Not more than 
 51.5   one-third of the members of the board may be so filled in any 
 51.6   one year except any number may be appointed to provide for at 
 51.7   least three five directors until any subsequent meeting of the 
 51.8   stockholders.  
 51.9      Sec. 60.  Minnesota Statutes 1996, section 303.02, 
 51.10  subdivision 4, is amended to read: 
 51.11     Subd. 4.  [FOREIGN CORPORATION.] "Foreign corporation" does 
 51.12  not include any corporation which, under the constitution and 
 51.13  statutes of the United States, may transact business in this 
 51.14  state without first obtaining a certificate of authority so to 
 51.15  do, insurance companies as defined by section 60A.02, and any 
 51.16  banking or trust association or corporation or national banking 
 51.17  association acting in this state as an executor, administrator, 
 51.18  trustee, or guardian, or conservator under section 303.25.  
 51.19     Sec. 61.  Minnesota Statutes 1996, section 303.25, 
 51.20  subdivision 5, is amended to read: 
 51.21     Subd. 5.  [SOLICITATION OF BUSINESS.] A foreign trust 
 51.22  association may not maintain an office within this state, but it 
 51.23  may solicit business within this state if banking or trust 
 51.24  associations or corporations organized under the laws of this 
 51.25  state or national banking associations maintaining their 
 51.26  principal offices in this state may solicit business in the 
 51.27  state in which the foreign trust association maintains its 
 51.28  principal office.  For purposes of this subdivision, 
 51.29  solicitation of business includes the activities authorized for 
 51.30  state or national banking associations exercising fiduciary 
 51.31  powers maintaining their principal offices in this state 
 51.32  considered a representative trust office established under 
 51.33  section 48.476. 
 51.34     Sec. 62.  Minnesota Statutes 1996, section 325F.68, 
 51.35  subdivision 2, is amended to read: 
 51.36     Subd. 2.  "Merchandise" means any objects, wares, goods, 
 52.1   commodities, intangibles, real estate, loans, or services.  
 52.2      Sec. 63.  Minnesota Statutes 1996, section 332.21, is 
 52.3   amended to read: 
 52.4      332.21 [CONTRACTS.] 
 52.5      (a) Each contract entered into by the licensee and the 
 52.6   debtor shall be in writing and signed by both parties.  The 
 52.7   licensee shall furnish the debtor with a copy of the signed 
 52.8   contract.  Each such contract shall set forth: 
 52.9      (1) the dollar charges agreed upon for the services of the 
 52.10  licensee, clearly disclosing to such debtor the total amount 
 52.11  which may be retained by licensee for services if the contract 
 52.12  is fully performed, which maximum amount would be the 
 52.13  origination fee together with 15 percent of the amount scheduled 
 52.14  to be liquidated by such contract,.  This disclosure must state 
 52.15  that if the amount of debt owed is increased by interest, late 
 52.16  fees, over the limit fees, and other amounts imposed by the 
 52.17  creditor or by reason of the events under paragraph (c), the 
 52.18  length of the contract would be extended and remain in force and 
 52.19  that the total dollar charges agreed upon may increase at the 
 52.20  rate agreed upon in the original contract; 
 52.21     (2) the terms upon which the debtor may cancel the contract 
 52.22  as set out in section 332.23,; 
 52.23     (3) all debts which are to be managed by the licensee, 
 52.24  including the name of the creditor and the amount of the debt,; 
 52.25  and 
 52.26     (4) such other matter as the commissioner may require by 
 52.27  rule.  
 52.28     (b) A contract shall not be effective until a payment has 
 52.29  been made to the licensee for distribution to creditors or until 
 52.30  three business days after the signing thereof, whichever is 
 52.31  later.  Within such period an individual may disaffirm said 
 52.32  contract and upon such disaffirmance said contract shall be null 
 52.33  and void.  
 52.34     (c) Total fees contained in the contract may be exceeded in 
 52.35  relation to creditors under open-end agreements if it is agreed 
 52.36  to in the contract and the additional debts so contracted to be 
 53.1   prorated do not exceed ten percent of the original debts in the 
 53.2   contract or written revisions to the original contract. 
 53.3      Sec. 64.  Minnesota Statutes 1996, section 332.23, 
 53.4   subdivision 1, is amended to read: 
 53.5      Subdivision 1.  [ORIGINATION FEE, CREDIT BACKGROUND REPORT 
 53.6   COST.] The licensee may charge an origination fee of not more 
 53.7   than $25 and collect from the debtor the actual cost of a credit 
 53.8   background report obtained from a credit reporting agency not 
 53.9   related to or affiliated with the licensee or if affiliated, the 
 53.10  total cost of the report may not exceed $8.  The costs to the 
 53.11  debtor of said origination fee and credit background report may 
 53.12  be made from the originating amount paid by the debtor to the 
 53.13  licensee.  The cost of only one credit background report may be 
 53.14  collected from the debtor in any 12-month period. 
 53.15     Sec. 65.  Minnesota Statutes 1996, section 332.23, 
 53.16  subdivision 2, is amended to read: 
 53.17     Subd. 2.  [WITHDRAWAL OF FEE.] The licensee may withdraw 
 53.18  and retain as partial payment of the licensee's total fee not 
 53.19  more than 15 percent of any sum deposited with the licensee by 
 53.20  the debtor for distribution.  The remaining 85 percent must be 
 53.21  disbursed to listed creditors pursuant to and in accordance with 
 53.22  the contract between the debtor and the licensee within 35 days 
 53.23  after receipt unless the reasonable payment of one or more of 
 53.24  the debtor's obligations requires that the funds be held for a 
 53.25  longer period so as to accumulate a sum certain or where the 
 53.26  debtor's payment is returned for nonsufficient funds, then no 
 53.27  longer than 42 days.  Total payment to licensee for services 
 53.28  rendered, excluding the origination fee and any credit 
 53.29  background report, shall not exceed 15 percent of funds 
 53.30  deposited with licensee by debtor for distribution. 
 53.31     Sec. 66.  Minnesota Statutes 1996, section 332.23, 
 53.32  subdivision 5, is amended to read: 
 53.33     Subd. 5.  [ADVANCE PAYMENTS.] Notwithstanding anything 
 53.34  herein to the contrary no fees or charges shall be received or 
 53.35  retained for any payments by the debtor made more than the 
 53.36  following number of days in advance of the date specified in the 
 54.1   contract on which they are due:  (a) 30 42 days in the case of 
 54.2   contracts requiring monthly payments; (b) 15 days in the case of 
 54.3   contracts requiring biweekly payments; or (c) seven days in the 
 54.4   case of contracts requiring weekly payments.  For those 
 54.5   contracts which do not require payments in specified amounts, a 
 54.6   payment shall be deemed an advance payment to the extent it 
 54.7   exceeds twice the average regular payment theretofore made by 
 54.8   the debtor pursuant to that contract.  This subdivision shall 
 54.9   not apply when it is the intention of the debtor to use such 
 54.10  advance payments to satisfy future payment of obligations due 
 54.11  within 30 days under the contract. 
 54.12     Sec. 67.  Minnesota Statutes 1996, section 332.50, 
 54.13  subdivision 1, is amended to read: 
 54.14     Subdivision 1.  [DEFINITIONS.] "Check" means a check, 
 54.15  draft, order of withdrawal, or similar negotiable or 
 54.16  nonnegotiable instrument.  
 54.17     "Credit" means an arrangement or understanding with the 
 54.18  drawee for the payment of the check. 
 54.19     "Dishonor" has the meaning given in section 336.3-502, but 
 54.20  does not include dishonor due to a stop payment order requested 
 54.21  by an issuer who has a good faith defense to payment on the 
 54.22  check.  "Dishonor" does include a stop payment order requested 
 54.23  by an issuer if the account did not have sufficient funds for 
 54.24  payment of the check at the time of issuance, except for stop 
 54.25  payment orders on a check found to be stolen.  
 54.26     Sec. 68.  Minnesota Statutes 1996, section 332.50, 
 54.27  subdivision 2, is amended to read: 
 54.28     Subd. 2.  [ACTS CONSTITUTING.] (a) Whoever issues any check 
 54.29  that is dishonored and is not paid within 30 days after mailing 
 54.30  a notice of dishonor that includes a citation to this section 
 54.31  and section 609.535, and a description of the penalties 
 54.32  contained in these sections, in compliance with subdivision 3, 
 54.33  is liable to the payee, holder, or agent of the holder for the 
 54.34  following penalties:  (1) the amount of the check plus a civil 
 54.35  penalty of up to $100 or up to 100 percent of the value of the 
 54.36  check, whichever is greater; (2) interest at the rate payable on 
 55.1   judgments pursuant to section 549.09 on the face amount of the 
 55.2   check from the date of dishonor; and (3) reasonable attorney 
 55.3   fees if the aggregate amount of dishonored checks issued by the 
 55.4   issuer to all payees within a six-month period is over $1,250. 
 55.5      (b) If the amount of the dishonored check plus any service 
 55.6   charges that have been incurred under paragraph (d) or (e) have 
 55.7   not been paid within 30 days after having mailed a notice of 
 55.8   dishonor in compliance with subdivision 3 but before bringing an 
 55.9   action, a payee, holder, or agent of the holder may make a 
 55.10  written demand for payment for the liability imposed by 
 55.11  paragraph (a) by sending a copy of this section and a 
 55.12  description of the liability contained in this section to the 
 55.13  issuer's last known address. 
 55.14     (c) After notice has been sent but before an action under 
 55.15  this section is heard by the court, the plaintiff shall settle 
 55.16  the claim if the defendant gives the plaintiff the amount of the 
 55.17  check plus court costs, any service charge owed under paragraph 
 55.18  (d), and reasonable attorney fees if provided for under 
 55.19  paragraph (a), clause (3).  
 55.20     (d) A service charge may be imposed immediately on any 
 55.21  dishonored check, regardless of mailing a notice of dishonor, if 
 55.22  written notice of the service charge was conspicuously displayed 
 55.23  on the premises when the check was issued.  The service charge 
 55.24  may not exceed $20, except that if the payee uses the services 
 55.25  of a law enforcement agency to obtain payment of a dishonored 
 55.26  check, a service charge of up to $25 may be imposed if the 
 55.27  service charge is used to reimburse the law enforcement agency 
 55.28  for its expenses.  A payee may impose only one service charge 
 55.29  under this paragraph for each dishonored check.  
 55.30     (e) This subdivision prevails over any provision of law 
 55.31  limiting, prohibiting, or otherwise regulating service charges 
 55.32  authorized by this subdivision, but does not nullify charges for 
 55.33  dishonored checks, which do not exceed the charges in paragraph 
 55.34  (d) or the actual cost of collection, but in no case more than 
 55.35  $30, or terms or conditions for imposing the charges which have 
 55.36  been agreed to by the parties to an express contract. 
 56.1      (a) A service charge of up to $20, or actual costs of 
 56.2   collection not to exceed $30, may be imposed immediately on any 
 56.3   dishonored check, regardless of mailing a notice of dishonor, if 
 56.4   notice of the service charge was conspicuously displayed on the 
 56.5   premises when the check was issued.  If a law enforcement agency 
 56.6   obtains payment of a dishonored check, a service charge not to 
 56.7   exceed $50 may be imposed if the service charge is retained by 
 56.8   the law enforcement agency for its expenses.  Only one service 
 56.9   charge may be imposed under this paragraph for each dishonored 
 56.10  check. 
 56.11     (b) If the amount of the dishonored check is not paid 
 56.12  within 30 days after payee or holder having mailed notice of 
 56.13  dishonor pursuant to section 609.535, whoever issues the 
 56.14  dishonored check is liable to the payee or holder of the check 
 56.15  for: 
 56.16     (1) the amount of the check, the service charge as provided 
 56.17  in paragraph (a), plus a civil penalty of up to $100 or the 
 56.18  value of the check, whichever is greater.  The civil penalty may 
 56.19  not be imposed until 30 days following the mailing of the notice 
 56.20  of dishonor.  A payee or holder of the check may make a written 
 56.21  demand for payment of the civil liability by sending a copy of 
 56.22  this section and a description of the liability contained in 
 56.23  this section to the issuer's last known address.  Notice as 
 56.24  provided in paragraph (a) must also include notification that 
 56.25  additional civil penalties will be imposed for dishonored checks 
 56.26  for nonpayment after 30 days; 
 56.27     (2) interest at the rate payable on judgments pursuant to 
 56.28  section 549.09 on the face amount of the check from the date of 
 56.29  dishonor; and 
 56.30     (3) reasonable attorney fees if the aggregate amount of 
 56.31  dishonored checks issued by the issuer to all payees within a 
 56.32  six-month period is over $1,250. 
 56.33     (c) This subdivision prevails over any provision of law 
 56.34  limiting, prohibiting, or otherwise regulating service charges 
 56.35  authorized by this subdivision, but does not nullify charges for 
 56.36  dishonored checks, which do not exceed the charges in paragraph 
 57.1   (a) or terms or conditions for imposing the charges which have 
 57.2   been agreed to by the parties in an express contract. 
 57.3      (d) A sight draft may not be used as a means of collecting 
 57.4   the civil penalties provided in this section without prior 
 57.5   consent of the issuer. 
 57.6      Sec. 69.  Laws 1996, chapter 414, article 1, section 45, is 
 57.7   amended to read: 
 57.8      Sec. 45.  [EFFECTIVE DATE.] 
 57.9      Sections 1 to 5, 7 to 9, 11, 12, 16, 20 to 27, 30, 33, 35, 
 57.10  42, 43, and 44, paragraphs (b) and (c), are effective the day 
 57.11  following final enactment.  Section 44, paragraph (a), is 
 57.12  effective July 1, 1998 1999. 
 57.13     Sections 10, 14, 15, 19, and 36 are effective on the 
 57.14  effective date of the repeals in section 44, paragraph (a). 
 57.15     Sec. 70.  [TOWN OF HASSAN; DETACHED BANKING FACILITY.] 
 57.16     With the prior approval of the commissioner of commerce, a 
 57.17  bank operating its main banking office within six miles of the 
 57.18  town of Hassan may establish and maintain not more than one 
 57.19  detached facility in the town of Hassan.  A bank desiring to 
 57.20  establish a detached facility must follow the approval procedure 
 57.21  prescribed in Minnesota Statutes, section 47.54.  The 
 57.22  establishment of a detached facility according to this section 
 57.23  is subject to the provisions of Minnesota Statutes, sections 
 57.24  47.51 to 47.57, except to the extent those sections are 
 57.25  inconsistent with this section. 
 57.26     Sec. 71.  [TOWN OF THOMSON; DETACHED BANKING FACILITY.] 
 57.27     With the prior approval of the commissioner of commerce, a 
 57.28  bank operating its main office within 20 miles of the town of 
 57.29  Thomson may establish and maintain not more than one detached 
 57.30  facility in the town of Thomson.  A bank desiring to establish a 
 57.31  detached facility must follow the approval procedure prescribed 
 57.32  in Minnesota Statutes, section 47.54.  The establishment of a 
 57.33  detached facility pursuant to this section is subject to the 
 57.34  provisions of Minnesota Statutes, sections 47.51 to 47.57, 
 57.35  except to the extent those sections are inconsistent with this 
 57.36  section. 
 58.1      Sec. 72.  [TRANSACTION ACCOUNT CUSTOMER INFORMATION; 
 58.2   INFORMAL WORKING GROUP.] 
 58.3      The commissioner of commerce shall select and convene an 
 58.4   informal working group to make recommendation to financial 
 58.5   intermediaries for notices to transaction account customers 
 58.6   regarding: 
 58.7      (1) risks and effects of account closing due to misuse by 
 58.8   customers as a means to enforce the deterrence objectives of 
 58.9   Minnesota Statutes, section 48.512, subdivision 7; 
 58.10     (2) risks related to providing account identification to 
 58.11  third parties for purposes of or resulting in their issuance of 
 58.12  sight drafts; and 
 58.13     (3) informing the customers of the privacy terms related to 
 58.14  the financial intermediaries' use of customer information. 
 58.15  The informal working group must include persons representing 
 58.16  financial intermediaries, transaction account clearing 
 58.17  organizations, retailers, and consumers.  The commissioner shall 
 58.18  accept recommendations from the working group for distribution 
 58.19  to financial intermediaries' to effect voluntary implementation 
 58.20  of transaction account customer information notices prior to 
 58.21  September 1, 1997. 
 58.22     Sec. 73.  [SCHOOL BANK PILOT PROJECT.] 
 58.23     (a) A school bank sponsored by independent school district 
 58.24  No. 31, Bemidji, that meets all requirements of paragraph (b) is 
 58.25  not subject to Minnesota Statutes, section 47.03, subdivision 1, 
 58.26  or to any other statute or rule that regulates banks, other 
 58.27  financial institutions, or currency exchanges. 
 58.28     (b) To qualify under paragraph (a), the school bank must: 
 58.29     (1) be operated as part of a high school educational 
 58.30  program and under guidelines adopted by the school board; 
 58.31     (2) be advised on a regular basis by a state-chartered or 
 58.32  federally-chartered financial institution, but not owned or 
 58.33  operated by that financial institution; 
 58.34     (3) be located on school premises and have as customers 
 58.35  only students enrolled in, or employees of, the school in which 
 58.36  it is located; and 
 59.1      (4) have a written commitment from the school board, 
 59.2   guaranteeing reimbursement of any depositor's funds lost due to 
 59.3   insolvency of the school bank. 
 59.4      (c) Funds of a school bank that meets the requirements of 
 59.5   this section are not school district or other public funds for 
 59.6   purposes of any state law governing the use or investment of 
 59.7   school district or other public funds. 
 59.8      (d) The school district shall annually file with the 
 59.9   commissioner of commerce a report, prepared by the students and 
 59.10  teachers involved, summarizing the operation of the school bank. 
 59.11     (e) This section expires June 30, 2000.  The commissioner 
 59.12  of commerce shall, no later than December 15, 1999, provide a 
 59.13  written report to the legislature regarding this pilot project 
 59.14  and any recommended legislation regarding school banks. 
 59.15     Sec. 74.  [REPEALER.] 
 59.16     Minnesota Statutes 1996, sections 13.99, subdivision 13; 
 59.17  47.29; 47.31; 47.32; 49.47; 49.48; 50.03; 50.23; and 59A.14, are 
 59.18  repealed. 
 59.19     Sec. 75.  [EFFECTIVE DATE; APPLICABILITY.] 
 59.20     Sections 1, 4 to 6, 8, 10, 11, 17, 22 to 24, 26, 27, 30 to 
 59.21  33, 35 to 58, 61, 63, 65, 66, 73, and 74 are effective the day 
 59.22  following final enactment.  
 59.23     Section 70 takes effect the day after compliance by the 
 59.24  town board of the town of Hassan with Minnesota Statutes, 
 59.25  section 645.021, subdivision 3. 
 59.26     Section 71 takes effect the day after compliance by the 
 59.27  town board of the town of Thomson with Minnesota Statutes, 
 59.28  section 645.021, subdivision 3. 
 59.29     Section 72 is effective June 1, 1997.