HF 2017

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to financial institutions; providing for
reasonable account fees; amending Minnesota Statutes
2004, sections 9.031, subdivision 13; 47.76; 48.512,
subdivision 7; 50.17, subdivision 11; 51A.21,
subdivision 28; 118A.02, subdivision 1; 427.01;
427.02; proposing coding for new law in Minnesota
Statutes, chapters 427; 469.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 9.031,
subdivision 13, is amended to read:

Subd. 13.

Required community reinvestment rating new text begin and
affordable accounts new text end .

Banks and trust companies designated as
depositories must have received ratings of "outstanding" or
"satisfactory" as their most recent rating under United States
Code, title 12, section 2906 new text begin , and must comply with sections
47.76 and 48.512, subdivision 7 new text end . If a state depository receives
a rating that is below "satisfactory deleted text begin , deleted text end " new text begin or fails to comply with
sections 47.76 and 48.512, subdivision 7, new text end the Executive Council
shall revoke its designation as a depository. The Executive
Council may delay the effective date of the revocation if
necessary to allow a reasonable period of time to arrange for a
replacement depository.

Sec. 2.

Minnesota Statutes 2004, section 47.76, is amended
to read:

47.76 REQUIRED deleted text begin SAVINGS ACCOUNT deleted text end new text begin LIFELINE ACCOUNTS new text end .

new text begin (a) new text end A federal or state chartered financial institution,
including, but not limited to, a bank, savings association,
savings bank, or credit union, shall offer to a Minnesota
resident new text begin :
new text end

new text begin (1) new text end a savings account to promote thrift that has no service
charge or fee, if such an account has an average monthly balance
of more than $50 deleted text begin . deleted text end new text begin , and from which money orders may be purchased
for a charge of 50 cents or less; and
new text end

new text begin (2) a checking account that:
new text end

new text begin (i) has a charge of not more than $10 per dishonored
overdraft and not more than $15 per honored overdaft;
new text end

new text begin (ii) has a monthly maintenance fee of not more than $3 if
no minimum balance is maintained;
new text end

new text begin (iii) provides optional overdraft protection with a limit
as low as $200 to qualified applicants; and
new text end

new text begin (iv) processes checks drawn against the account in a manner
that is not based upon debiting the largest checks first.
new text end

new text begin (b) Financial institutions shall actively promote the
accounts required under this section in their service areas
determined for purposes of the Federal Community Reinvestment
Act.
new text end

new text begin (c) The accounts required under this section must be
designated by financial institutions as the lifeline savings
account and the lifeline checking account.
new text end

Sec. 3.

Minnesota Statutes 2004, section 48.512,
subdivision 7, is amended to read:

Subd. 7.

Transaction account service charges and charges
relating to dishonored checks.

(a) The establishment of
transaction account service charges and the amounts of the
charges not otherwise limited or prescribed by law or rule deleted text begin is a
business decision to be made by each financial intermediary
according to sound business judgment and safe, sound financial
institution operational standards deleted text end new text begin must be submitted to the
commissioner for prior approval new text end . In deleted text begin establishing deleted text end new text begin determining
whether to approve new text end transaction account service charges,
the deleted text begin financial intermediary deleted text end new text begin commissioner new text end may consider, but is not
limited to considering:

(1) costs incurred by the institution, plus a profit
margin, in providing the service;

(2) the deterrence of misuse by customers of financial
institution services;

(3) the establishment of the competitive position of the
financial institution in accordance with the institution's
marketing strategy; and

(4) maintenance of the safety and soundness of the
institution.

(b) Transaction account service charges must be reasonable
in relation to these considerations and should be deleted text begin arrived at
deleted text end new text begin submitted for the commissioner's approval new text end by each financial
intermediary on a competitive basis and not on the basis of any
agreement, arrangement, undertaking, or discussion with other
financial intermediaries or their officers.

(c) A financial intermediary may not impose a service
charge in excess of $4 for a dishonored check on any person
other than the issuer of the check.

new text begin (d) The commissioner shall not approve any proposed charges
under this section unless the financial intermediary complies
with section 47.76, including the active promotion of the
accounts required by that section.
new text end

Sec. 4.

Minnesota Statutes 2004, section 50.17,
subdivision 11, is amended to read:

Subd. 11.

Service charges.

A savings bank may contract
with depositors for service charges in connection with the
opening and maintaining of deposit accounts and for providing
services ancillary to the opening and maintaining of deposit
accounts. The service charges are deleted text begin a matter of contract between
the savings bank and the depositor, and the contract will be
fully enforceable in accordance with its stated terms deleted text end new text begin subject to
section 48.512, subdivision 7 new text end .

Sec. 5.

Minnesota Statutes 2004, section 51A.21,
subdivision 28, is amended to read:

Subd. 28.

Service charges.

To contract with depositors
for service charges in connection with the opening and
maintaining of deposit accounts and for providing services
ancillary to the opening and maintaining of deposit accounts.
Service charges are deleted text begin a matter of contract between the association
and the depositor, and any such contract is fully enforceable
according to its stated terms deleted text end new text begin subject to section 48.512,
subdivision 7 new text end .

Sec. 6.

Minnesota Statutes 2004, section 118A.02,
subdivision 1, is amended to read:

Subdivision 1.

Designation; delegation.

(a) The
governing body of each government entity shall designate, as a
depository of its funds, one or more financial institutions.

(b) The governing body may authorize the treasurer or chief
financial officer to:

(1) designate depositories of the funds;

(2) make investments of funds under sections 118A.01 to
118A.06 or other applicable law; or

(3) both designate depositories and make investments as
provided in this subdivision.

new text begin (c) A depository designated under paragraph (a) must comply
with sections 47.76 and 48.512, subdivision 7.
new text end

Sec. 7.

Minnesota Statutes 2004, section 427.01, is
amended to read:

427.01 DEPOSIT OF PUBLIC FUNDS.

The council of any statutory city or of any city of the
fourth class shall designate as a depository of city funds such
national, state, or private banks as it may deem proper. new text begin A
depository must comply with sections 47.76 and 48.512,
subdivision 7. new text end Except as to deposits insured by the federal
deposit insurance corporation or protected by collateral or a
corporate surety bond furnished under section 118A.03, each
shall give bond to the municipality in at least double the
amount authorized to be deposited therein, to be approved by the
council, conditioned to repay all sums deposited therein upon
proper demand therefor or at such time, not exceeding one year,
as fixed by the terms of the deposit, and for the performance of
such other duties as the council may require. The council shall
require the city treasurer to deposit all or any part of the
public funds in hand in such banks and to withdraw the same when
so directed. All the terms and conditions of deposit shall be
set forth in the resolution designating the several
depositories, which resolution shall be filed with the clerk or
recorder. The treasurer shall not be liable on the treasurer's
bond for any money so deposited by direction of the council and
lost through the failure, bankruptcy, or other default of the
bank. All interest accruing upon these deposits shall belong to
the city.

Sec. 8.

Minnesota Statutes 2004, section 427.02, is
amended to read:

427.02 DEPOSITORIES.

The council of any city in this state, but not including
cities when governed under a charter adopted under and pursuant
to the Constitution of the state of Minnesota, article IV,
section 36, article XI, section 4, or article XII, section 5,
and sections 410.03 to 410.24, and all acts supplemental
thereto, in which charter the matter of designating depositories
for city funds and the protection thereof is provided for, or in
which charter it shall hereafter be provided for, shall have the
power and authority to designate or redesignate at the beginning
of each calendar year, or from time to time, the banks or other
legal depositories of any city in which the treasurer of the
city shall deposit and keep the moneys of the city, designating
in each instance the maximum amount which may at any time be
kept in any one of these depositories, which maximum amount
shall in no case exceed 25 percent of the paid-up capital and
surplus of the depository, unless the depository shall deposit
with the treasurer of the city United States government bonds to
secure the deposit of the funds of the city; and, in that event,
the amount so deposited shall not exceed the amount of the
United States government bonds so deposited. No depository
shall deposit United States government bonds which mature within
one year from the date such bonds were first considered as a
part of the bank's reserve and which reserves are required by
section 48.221. The council of each city shall, at all times,
designate depositories in the city, or elsewhere in the United
States, sufficient for the depository of all funds which are
likely to be in the hands of the treasurer of the city at any
one time and shall, so far as consistent with the best interest
of the city, designate these depositories in the city and
require from these depositories good and sufficient bonds
payable to the city in a penal sum not to exceed the amount
designated as the limit of deposit therein, and conditioned for
the safekeeping and payment of funds so deposited, or, in lieu
thereof, good and sufficient collateral as provided for by
section 118A.03. new text begin A depository must comply with sections 47.76
and 48.512, subdivision 7.
new text end

Sec. 9.

new text begin [427.025] DEPOSITORIES; HOME RULE CHARTER
CITIES.
new text end

new text begin Home rule charter cities may designate as depositories only
financial institutions that comply with sections 47.76 and
48.512, subdivision 7. This section applies regardless of any
provision of a home rule charter to the contrary.
new text end

Sec. 10.

new text begin [469.32] LOAN PROGRAMS; FINANCIAL INSTITUTIONS.
new text end

new text begin No financial institution is eligible to participate in a
loan program sponsored or funded by the state or by any of its
political subdivisions unless the financial institution complies
with sections 47.76 and 48.512, subdivision 7.
new text end

Sec. 11. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 10 are effective January 1, 2006.
new text end