1.1                          A bill for an act
  1.2             relating to financial institutions; regulating fees 
  1.3             and charges imposed on account holders and others; 
  1.4             amending Minnesota Statutes 1996, sections 9.031, 
  1.5             subdivision 13; 47.61, by adding a subdivision; 47.64, 
  1.6             by adding a subdivision; 48.512, subdivision 7; 50.17, 
  1.7             subdivision 11; 51A.21, subdivision 28; 118A.02, 
  1.8             subdivision 1; and 427.01; Minnesota Statutes 1997 
  1.9             Supplement, section 427.02; proposing coding for new 
  1.10            law in Minnesota Statutes, chapters 427; and 469. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1996, section 9.031, 
  1.13  subdivision 13, is amended to read: 
  1.14     Subd. 13.  [REQUIRED COMMUNITY REINVESTMENT RATING.] Banks 
  1.15  and trust companies designated as depositories must have 
  1.16  received ratings of "outstanding" or "satisfactory" as their 
  1.17  most recent rating under United States Code, title 12, section 
  1.18  2906, and must comply with section 48.512, subdivision 7.  If a 
  1.19  state depository receives a rating that is below "satisfactory," 
  1.20  or fails to comply with section 48.512, subdivision 7, the 
  1.21  executive council shall revoke its designation as a depository.  
  1.22  The executive council may delay the effective date of the 
  1.23  revocation if necessary to allow a reasonable period of time to 
  1.24  arrange for a replacement depository.  
  1.25     Sec. 2.  Minnesota Statutes 1996, section 47.61, is amended 
  1.26  by adding a subdivision to read: 
  1.27     Subd. 3a.  "Electronic financial terminal surcharge" means 
  1.28  a transaction fee assessed by the owner or operator of the 
  2.1   electronic financial terminal. 
  2.2      Sec. 3.  Minnesota Statutes 1996, section 47.64, is amended 
  2.3   by adding a subdivision to read: 
  2.4      Subd. 8.  [LIMITATION ON FEES.] An electronic financial 
  2.5   terminal surcharge may not be assessed against a consumer if the 
  2.6   transaction does not relate to or affect an account held by the 
  2.7   consumer with the financial institution that is the owner or 
  2.8   operator of the electronic financial terminal. 
  2.9      The limitation on fees in this subdivision does not apply 
  2.10  to an owner or operator of not more than one electronic 
  2.11  financial terminal. 
  2.12     Sec. 4.  Minnesota Statutes 1996, section 48.512, 
  2.13  subdivision 7, is amended to read: 
  2.14     Subd. 7.  [TRANSACTION ACCOUNT SERVICE CHARGES AND CHARGES 
  2.15  RELATING TO DISHONORED CHECKS.] (a) The establishment of 
  2.16  transaction account service charges and the amounts of the 
  2.17  charges not otherwise limited or prescribed by law or rule is a 
  2.18  business decision to be made by each financial intermediary 
  2.19  according to sound business judgment and safe, sound financial 
  2.20  institution operational standards must be submitted to the 
  2.21  commissioner for prior approval.  In establishing determining 
  2.22  whether to approve transaction account service charges, 
  2.23  the financial intermediary commissioner may consider, but is not 
  2.24  limited to considering: 
  2.25     (1) costs incurred by the institution, plus a profit 
  2.26  margin, in providing the service; 
  2.27     (2) the deterrence of misuse by customers of financial 
  2.28  institution services; 
  2.29     (3) the establishment of the competitive position of the 
  2.30  financial institution in accordance with the institution's 
  2.31  marketing strategy; and 
  2.32     (4) maintenance of the safety and soundness of the 
  2.33  institution. 
  2.34     (b) Transaction account service charges must be reasonable 
  2.35  in relation to these considerations and should be arrived at 
  2.36  submitted for the commissioner's approval by each financial 
  3.1   intermediary on a competitive basis and not on the basis of any 
  3.2   agreement, arrangement, undertaking, or discussion with other 
  3.3   financial intermediaries or their officers. 
  3.4      (c) A financial intermediary may not impose a service 
  3.5   charge in excess of $4 for a dishonored check on any person 
  3.6   other than the issuer of the check.  If the issuer of the check 
  3.7   is a customer, the financial intermediary may not impose a 
  3.8   service charge of more than $4 per dishonored check, subject to 
  3.9   a $25 maximum for all dishonored checks written by the customer 
  3.10  on the same day. 
  3.11     (d) A financial intermediary may not impose a charge for 
  3.12  the voluntary closing of a transaction account. 
  3.13     (e) A financial intermediary may not impose a charge on a 
  3.14  customer for the services of an employee of the financial 
  3.15  intermediary who assists the customer by providing financial 
  3.16  institution services on a transaction account. 
  3.17     (f) A financial intermediary may not impose a charge on a 
  3.18  customer for the use of, or connection to, a telephone line to 
  3.19  provide or assist in the provision of financial institution 
  3.20  services on a transaction account. 
  3.21     (g) A financial intermediary may not impose a charge on a 
  3.22  customer for financial institution services related to the use 
  3.23  of an electronic financial terminal owned or operated by the 
  3.24  financial intermediary if the services relate to or affect an 
  3.25  account held by the customer with the financial intermediary. 
  3.26     (h) A financial intermediary must, at the time an account 
  3.27  is opened, disclose to the customer all service charges and 
  3.28  charges relating to dishonored checks that it may impose.  The 
  3.29  disclosure must be in writing on a form not to exceed one 8-1/2 
  3.30  by 11 inch page in length prescribed by the commissioner of 
  3.31  commerce. 
  3.32     Sec. 5.  Minnesota Statutes 1996, section 50.17, 
  3.33  subdivision 11, is amended to read: 
  3.34     Subd. 11.  [SERVICE CHARGES.] A savings bank may contract 
  3.35  with depositors for service charges in connection with the 
  3.36  opening and maintaining of deposit accounts and for providing 
  4.1   services ancillary to the opening and maintaining of deposit 
  4.2   accounts.  The service charges are a matter of contract between 
  4.3   the savings bank and the depositor, and the contract will be 
  4.4   fully enforceable in accordance with its stated terms subject to 
  4.5   section 48.512, subdivision 7. 
  4.6      Sec. 6.  Minnesota Statutes 1996, section 51A.21, 
  4.7   subdivision 28, is amended to read: 
  4.8      Subd. 28.  [SERVICE CHARGES.] To contract with depositors 
  4.9   for service charges in connection with the opening and 
  4.10  maintaining of deposit accounts and for providing services 
  4.11  ancillary to the opening and maintaining of deposit accounts.  
  4.12  Service charges are a matter of contract between the association 
  4.13  and the depositor, and any such contract is fully enforceable 
  4.14  according to its stated terms subject to section 48.512, 
  4.15  subdivision 7. 
  4.16     Sec. 7.  Minnesota Statutes 1996, section 118A.02, 
  4.17  subdivision 1, is amended to read: 
  4.18     Subdivision 1.  [DESIGNATION; DELEGATION.] (a) The 
  4.19  governing body of each government entity shall designate, as a 
  4.20  depository of its funds, one or more financial institutions.  
  4.21  The governing body may authorize the treasurer or chief 
  4.22  financial officer to: 
  4.23     (1) designate depositories of the funds; 
  4.24     (2) make investments of funds under sections 118A.01 to 
  4.25  118A.06 or other applicable law; or 
  4.26     (3) both designate depositories and make investments as 
  4.27  provided in this subdivision. 
  4.28     (b) A depository designated under paragraph (a) must comply 
  4.29  with section 48.512, subdivision 7. 
  4.30     Sec. 8.  Minnesota Statutes 1996, section 427.01, is 
  4.31  amended to read: 
  4.32     427.01 [DEPOSIT OF PUBLIC FUNDS.] 
  4.33     The council of any statutory city or of any city of the 
  4.34  fourth class shall designate as a depository of city funds such 
  4.35  national, state, or private banks as it may deem proper.  A 
  4.36  depository must comply with section 48.512, subdivision 7.  
  5.1   Except as to deposits insured by the federal deposit insurance 
  5.2   corporation or protected by collateral or a corporate surety 
  5.3   bond furnished under section 118A.03, each shall give bond to 
  5.4   the municipality in at least double the amount authorized to be 
  5.5   deposited therein, to be approved by the council, conditioned to 
  5.6   repay all sums deposited therein upon proper demand therefor or 
  5.7   at such time, not exceeding one year, as fixed by the terms of 
  5.8   the deposit, and for the performance of such other duties as the 
  5.9   council may require.  The council shall require the city 
  5.10  treasurer to deposit all or any part of the public funds in hand 
  5.11  in such banks and to withdraw the same when so directed.  All 
  5.12  the terms and conditions of deposit shall be set forth in the 
  5.13  resolution designating the several depositories, which 
  5.14  resolution shall be filed with the clerk or recorder.  The 
  5.15  treasurer shall not be liable on the treasurer's bond for any 
  5.16  money so deposited by direction of the council and lost through 
  5.17  the failure, bankruptcy, or other default of the bank.  All 
  5.18  interest accruing upon these deposits shall belong to the city.  
  5.19     Sec. 9.  Minnesota Statutes 1997 Supplement, section 
  5.20  427.02, is amended to read: 
  5.21     427.02 [DEPOSITORIES.] 
  5.22     The council of any city in this state, but not including 
  5.23  cities when governed under a charter adopted under and pursuant 
  5.24  to the Constitution of the state of Minnesota, article IV, 
  5.25  section 36, article XI, section 4, or article XII, section 5, 
  5.26  and sections 410.03 to 410.24, and all acts supplemental 
  5.27  thereto, in which charter the matter of designating depositories 
  5.28  for city funds and the protection thereof is provided for, or in 
  5.29  which charter it shall hereafter be provided for, shall have the 
  5.30  power and authority to designate or redesignate at the beginning 
  5.31  of each calendar year, or from time to time, the banks or other 
  5.32  legal depositories of any city in which the treasurer of the 
  5.33  city shall deposit and keep the moneys of the city, designating 
  5.34  in each instance the maximum amount which may at any time be 
  5.35  kept in any one of these depositories, which maximum amount 
  5.36  shall in no case exceed 25 percent of the paid-up capital and 
  6.1   surplus of the depository, unless the depository shall deposit 
  6.2   with the treasurer of the city United States government bonds to 
  6.3   secure the deposit of the funds of the city; and, in that event, 
  6.4   the amount so deposited shall not exceed the amount of the 
  6.5   United States government bonds so deposited.  No depository 
  6.6   shall deposit United States government bonds which mature within 
  6.7   one year from the date such bonds were first considered as a 
  6.8   part of the bank's reserve and which reserves are required by 
  6.9   section 48.221.  The council of each city shall, at all times, 
  6.10  designate depositories in the city, or elsewhere in the United 
  6.11  States, sufficient for the depository of all funds which are 
  6.12  likely to be in the hands of the treasurer of the city at any 
  6.13  one time and shall, so far as consistent with the best interest 
  6.14  of the city, designate these depositories in the city and 
  6.15  require from these depositories good and sufficient bonds 
  6.16  payable to the city in a penal sum not to exceed the amount 
  6.17  designated as the limit of deposit therein, and conditioned for 
  6.18  the safekeeping and payment of funds so deposited, or, in lieu 
  6.19  thereof, good and sufficient collateral as provided for by 
  6.20  section 118A.03.  A depository must comply with section 48.512, 
  6.21  subdivision 7. 
  6.22     Sec. 10.  [427.025] [DEPOSITORIES; HOME RULE CHARTER 
  6.23  CITIES.] 
  6.24     Home rule charter cities may designate as depositories only 
  6.25  financial institutions that comply with section 48.512, 
  6.26  subdivision 7.  This section applies regardless of any provision 
  6.27  of a home rule charter to the contrary. 
  6.28     Sec. 11.  [469.32] [LOAN PROGRAMS; FINANCIAL INSTITUTIONS.] 
  6.29     No financial institution is eligible to participate in a 
  6.30  loan program sponsored or funded by the state or by any of its 
  6.31  political subdivisions unless the financial institution complies 
  6.32  with section 48.512, subdivision 7. 
  6.33     Sec. 12.  [EFFECTIVE DATE.] 
  6.34     Sections 1 to 11 are effective January 1, 1999.