as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
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 subdivision 9; 47.51; 47.55, subdivision 1; 47.56; 1.13 47.59, subdivisions 3, 12, and by adding subdivisions; 1.14 47.61, subdivision 3; 48.01, subdivision 2; 48.09, by 1.15 adding a subdivision; 48.15, subdivision 2; 48.185, 1.16 subdivisions 3 and 4; 48.24, subdivision 2, and by 1.17 adding a subdivision; 48.512, by adding subdivisions; 1.18 48.61, subdivision 7, and by adding a subdivision; 1.19 49.215, subdivision 3; 49.33; 49.42; 50.245; 51A.38, 1.20 subdivision 1; 52.04, subdivision 2a, and by adding a 1.21 subdivision; 52.062, subdivision 1, and by adding a 1.22 subdivision; 52.063; 52.064, by adding a subdivision; 1.23 52.201; 53.04, by adding a subdivision; 53.05; 53.09, 1.24 subdivision 2a; 55.06, subdivision 1; 56.07; 56.10, 1.25 subdivision 1; 56.131, subdivisions 1 and 4; 59A.08, 1.26 subdivision 3, and by adding a subdivision; 59A.11, 1.27 subdivisions 2 and 3; 62B.04, subdivision 1; 300.20, 1.28 subdivision 2; 303.25, subdivision 5; 332.21; 332.23, 1.29 subdivisions 2 and 5; proposing coding for new law in 1.30 Minnesota Statutes, chapter 48; repealing Minnesota 1.31 Statutes 1996, sections 13.99, subdivision 13; 47.29; 1.32 47.31; 47.32; 48.185, subdivision 5; 49.47; 49.48; 1.33 50.03; 50.23; and 59A.14. 1.34 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.35 Section 1. Minnesota Statutes 1996, section 46.04, is 1.36 amended by adding a subdivision to read: 1.37 Subd. 4. [APPLICATIONS, FACSIMILE OR ELECTRONIC MEDIA.] (a) 1.38 The commissioner when providing forms and procedural guidance to 1.39 persons governed by or seeking approval to operate under the 2.1 chapters referred to in this section may prescribe alternatives 2.2 to paper forms and delivery in person or by mail. In 2.3 considering accepting filings by facsimile or electronic media, 2.4 the commissioner may accept fees and reimbursement for costs 2.5 associated with the applications and notices by wire transfer 2.6 and debit card. 2.7 (b) Certifications required to authenticate, officiate, or 2.8 establish standing of the application or notice as a matter of 2.9 law, rule, or sound business practice may be authenticated in an 2.10 alternative to paper-based original signatures or notarial seals 2.11 on facsimile or electronic media submissions in a technically 2.12 competent means at the discretion of the commissioner, including 2.13 but not limited to, document imaging meeting the standard in 2.14 subdivision 3, bar coding, personal identification numbers, or 2.15 other reliable communicated verification technique. 2.16 Sec. 2. Minnesota Statutes 1996, section 46.044, is 2.17 amended by adding a subdivision to read: 2.18 Subd. 3. [SPECIAL PURPOSE BANKS, EXCEPTIONS.] For purposes 2.19 of applications to organize and operate special purpose banks as 2.20 defined in section 46.046, subdivision 5, the conditions in 2.21 subdivision 1, clauses (2) and (4), do not apply. 2.22 Sec. 3. Minnesota Statutes 1996, section 46.046, is 2.23 amended by adding a subdivision to read: 2.24 Subd. 5. [SPECIAL PURPOSE BANK.] Special purpose bank 2.25 means a bank as defined in subdivision 2 that: 2.26 (1) engages only in credit card operations as authorized in 2.27 section 47.59; 2.28 (2) does not accept demand deposits or deposits that the 2.29 depositor may withdraw by check or similar means for payment to 2.30 third parties or others; 2.31 (3) does not accept savings or time deposits of less than 2.32 $100,000; 2.33 (4) maintains only one office that accepts deposits; and 2.34 (5) does not engage in the business of making commercial 2.35 loans. 2.36 Sec. 4. Minnesota Statutes 1996, section 46.047, 3.1 subdivision 2, is amended to read: 3.2 Subd. 2. [BANKING INSTITUTION.] The term "banking 3.3 institution" means a bank, trust company, bank and trust 3.4 company, savings bank, or industrial loan and thrift 3.5
institution, that is organized under the laws of this state, or 3.6 a holding company governed by section 53.04, subdivision 5, 3.7 which owns or otherwise controls the banking institution. 3.8 Sec. 5. Minnesota Statutes 1996, section 46.07, 3.9 subdivision 2, is amended to read: 3.10 Subd. 2. [CONFIDENTIAL RECORDS.] The commissioner shall 3.11 divulge facts and information obtained in the course of 3.12 examining financial institutions under the commissioner's 3.13 supervision only when and to the extent required or permitted by 3.14 law to report upon or take special action regarding the affairs 3.15 of an institution, or ordered by a court of law to testify or 3.16 produce evidence in a civil or criminal proceeding, except that 3.17 the commissioner may furnish information as to matters of mutual 3.18 interest to an official or examiner of the federal reserve 3.19 system, the Federal Deposit Insurance Corporation, the Federal 3.20 Office of Thrift Supervision, the Federal Home Loan Bank System, 3.21 the National Credit Union Administration, comptroller of the 3.22 currency, a legally constituted state credit union share3.23 insurance corporation approved under section 52.24other state 3.24 bank supervisory agencies subject to cooperative agreements 3.25 authorized by section 49.411, subdivision 7, the United States 3.26 Small Business Administration, for purposes of sections 53.09, 3.27 subdivision 2a, and 56.10, subdivision 1, or state and federal 3.28 law enforcement agencies. The commissioner shall not be 3.29 required to disclose the name of a debtor of a financial 3.30 institution under the commissioner's supervision, or anything 3.31 relative to the private accounts, ownership, or transactions of 3.32 an institution, or any fact obtained in the course of an 3.33 examination thereof, except as herein provided. For purposes of 3.34 this subdivision, a subpoena is not an order of a court of law. 3.35 These records are classified confidential or protected nonpublic 3.36 for purposes of the Minnesota government data practices act and 4.1 their destruction, as prescribed in section 46.21, is exempt 4.2 from the provisions of chapter 138 and Laws 1971, chapter 529, 4.3 so far as their deposit with the state archives. 4.4 Sec. 6. Minnesota Statutes 1996, section 46.131, 4.5 subdivision 2, is amended to read: 4.6 Subd. 2. Each bank, trust company, savings bank, savings 4.7 association, small loan companyregulated lender, industrial 4.8 loan and thrift company, credit union, motor vehicle sales 4.9 finance company, debt prorating agency and insurance premium 4.10 finance company organized under the laws of this state or 4.11 required to be administered by the commissioner of commerce 4.12 shall pay into the state treasury its proportionate share of the 4.13 cost of maintaining the department of commerce. 4.14 Sec. 7. Minnesota Statutes 1996, section 47.20, 4.15 subdivision 9, is amended to read: 4.16 Subd. 9. For purposes of this subdivision the term 4.17 "mortgagee" shall mean all state banks and trust companies, 4.18 national banking associations, state and federally chartered 4.19 savings associations, mortgage banks, savings banks, insurance 4.20 companies, credit unions or assignees of the above. 4.21 (a) Each mortgagee requiring funds of a mortgagor to be 4.22 paid into an escrow, agency or similar account for the payment 4.23 of taxes or insurance premiums with respect to a mortgaged 4.24 one-to-four family, owner occupied residence located in this 4.25 state, unless the account is required by federal law or 4.26 regulation or maintained in connection with a conventional loan 4.27 in an original principal amount in excess of 80 percent of the 4.28 lender's appraised value of the residential unit at the time the 4.29 loan is made or maintained in connection with loans insured or 4.30 guaranteed by the secretary of housing and urban development, by 4.31 the administrator of veterans affairs, or by the administrator 4.32 of the farmers home administration or any successor, shall 4.33 calculate interest on such funds at a rate of not less than 4.34 three percent per annum. Such interest shall be computed on the 4.35 average monthly balance in such account on the first of each 4.36 month for the immediately preceding 12 months of the calendar 5.1 year or such other fiscal year as may be uniformly adopted by 5.2 the mortgagee for such purposes and shall be annually credited 5.3 to the remaining principal balance on the mortgage, or at the 5.4 election of the mortgagee, paid to the mortgagor or credited to 5.5 the mortgagor's account. If the interest exceeds the remaining 5.6 balance, the excess shall be paid to the mortgagor or vendee. 5.7 The requirement to pay interest shall apply to such accounts 5.8 created in conjunction with mortgage loans made prior to July 1, 5.9 1996. 5.10 (b) Unless the account is exempt from the requirements of 5.11 paragraph (a), a mortgagee shall allow a mortgagor to elect to 5.12 discontinue the escrow account after the seventh anniversary of 5.13 the date of the mortgage, unless the mortgagor has been more 5.14 than 30 days delinquent in the previous 12 months. This 5.15 paragraph shall apply to accounts created prior to July 1, 1996, 5.16 as well as to accounts created on or after July 1, 1996. The 5.17 mortgagor's election shall be in writing. If the escrow account 5.18 has a negative balance or a shortage at the time the mortgagor 5.19 requests discontinuance, the mortgagee is not obligated to allow 5.20 discontinuance until the escrow account is balanced or the 5.21 shortage has been repaid. 5.22 (c) The mortgagee shall notify the mortgagor within 60 days 5.23 after the seventh anniversary of the date of the mortgage if the 5.24 right to discontinue the escrow account is in accordance with 5.25 paragraph (b). For mortgage loans entered into, on or prior to 5.26 July 1, 1989, the notice required by this paragraph shall be 5.27 provided to the mortgagor by January 1, 1997. 5.28 (d) A mortgagee may require the mortgagor to reestablish 5.29 the escrow account if the mortgagor has failed to make timely 5.30 payments for two consecutive payment periods at any time during 5.31 the remaining term of the mortgage, or if the mortgagor has 5.32 failed to pay taxes or insurance premiums when due. A payment 5.33 received during a grace period shall be deemed timely. 5.34 (e) The mortgagee shall, subject to paragraph (b), return 5.35 any funds remaining in the account to the mortgagor within 60 5.36 days after receipt of the mortgagor's written notice of election 6.1 to discontinue the escrow account. 6.2 (f) The mortgagee shall not charge a direct fee for the 6.3 mortgagor's right to elect to personally maintain the escrow 6.4 account, administration of the escrow account, nor shall the 6.5 mortgagee charge a fee or other consideration for allowing the 6.6 mortgagor to discontinue the escrow account. 6.7 Sec. 8. Minnesota Statutes 1996, section 47.51, is amended 6.8 to read: 6.9 47.51 [DETACHED BANKING FACILITIES; DEFINITIONS.] 6.10 As used in sections 47.51 to 47.57: 6.11 "Extension of the mainbanking housepremises" means any 6.12 structure or stationary mechanical device serving as a drive-in 6.13 or walk-up facility, or both, which is located within 1,500 feet 6.14 of the main banking house or detached facility, the distance to 6.15 be measured in a straight line from the closest points of the 6.16 closest structures involved and which performs one or more of 6.17 the functions described in section 47.53. 6.18 "Detached facility" means any permanent structure, office 6.19 accommodation located within the premises of any existing 6.20 commercial or business establishment, stationary automated 6.21 remote controlled teller facility, stationary unstaffed cash 6.22 dispensing or receiving device, or mobile banking facility, 6.23 located or operating separate and apart from the main banking 6.24 housepremises which is not an "extension of the mainbanking 6.25 housepremises" as above defined, that serves as a drive-in or 6.26 walk-up facility, or both, with one or more tellers windows, or 6.27 as a remote controlled teller facility or a cash dispensing or 6.28 receiving device, and which performs one or more of those 6.29 functions described in section 47.53. 6.30 "Bank" means a bank as defined in section 46.046 and any 6.31 banking office established prior to the effective date of Laws 6.32 1923, chapter 170, section 1. 6.33 "Commissioner" means the commissioner of commerce. 6.34 "Mobile banking facility" is a detached facility approved 6.35 by the commissioner that is affiliated with the main banking 6.36 premises or a stationary detached facility, the operations of 7.1 which are limited to the locale within or about the community 7.2 served by the main bank or municipality served by an approved 7.3 stationary detached facility. The operations of a mobile 7.4 banking facility are limited in the same manner as the 7.5 establishment of a stationary bank or detached facility under 7.6 section 47.52. 7.7 "Municipality" means the geographical area encompassing the 7.8 boundaries of any home rule charter or statutory city located in 7.9 this state, and any detached area, pursuant to section 473.625, 7.10 operated as a major airport by the metropolitan airports 7.11 commission pursuant to sections 473.601 to 473.679. When a bank 7.12 is located in a township, the term municipality is expanded to 7.13 mean the geographical area encompassing the boundaries of the 7.14 township. 7.15 Sec. 9. Minnesota Statutes 1996, section 47.55, 7.16 subdivision 1, is amended to read: 7.17 Subdivision 1. [BANKING FACILITIES IN OPERATION PRIOR TO 7.18 MAY 1, 1971.] A bank may retain and operate one detached 7.19 facility as it may have had in operation prior to May 1, 1971 7.20 without requirement of approval hereunder , provided that its7.21 function is limited as provided in section 47.53 and its7.22 location conforms with the provisions of section 47.52. A bank7.23 having such a retained detached facility shall be limited to7.24 operating five additional detached facilities. 7.25 Sec. 10. Minnesota Statutes 1996, section 47.56, is 7.26 amended to read: 7.27 47.56 [TRANSFER OF LOCATION.] 7.28 The location of a detached facility transferred to another 7.29 location outside of a radius of three miles measured in a 7.30 straight line is subject to the same procedures and approval as 7.31 required hereunder for establishing a new detached facility ,7.32 except that. The location of a detached facility transferred to 7.33 another location within the lesser of a radius of three miles 7.34 measured in a straight line from the existing location or the 7.35 municipality, as defined in section 47.51, in which it is 7.36 located is subject to the same procedures and approval as are 8.1 required in section 47.101, subdivision 2. The relocation of a 8.2 detached facility within a municipality of 10,000 or less 8.3 population shall not require consent of other banks required in 8.4 section 47.52. 8.5 Sec. 11. Minnesota Statutes 1996, section 47.59, 8.6 subdivision 3, is amended to read: 8.7 Subd. 3. [FINANCE CHARGE FOR LOANS.] (a) With respect to a 8.8 loan, including a loan pursuant to open-end credit but excluding8.9 open-end credit pursuant to a credit card, a financial 8.10 institution may contract for and receive a finance charge on the 8.11 unpaid balance of the principal amount not to exceed the greater 8.12 of: 8.13 (1) an annual percentage rate not exceeding 21.75 percent; 8.14 or 8.15 (2) the total of: 8.16 (i) 33 percent per year on that part of the unpaid balance 8.17 of the principal amount not exceeding $750; and 8.18 (ii) 19 percent per year on that part of the unpaid balance 8.19 of the principal amount exceeding $750. 8.20 With respect to open-end credit pursuant to a credit card,8.21 the financial institution may contract for and receive a finance8.22 charge on the unpaid balance of the principal amount at an8.23 annual percentage rate not exceeding 18 percent per year.8.24 (b) On a loan where the finance charge is calculated 8.25 according to the method provided for in paragraph (a), clause 8.26 (2), the finance charge must be contracted for and earned as 8.27 provided in that provision or at the single annual percentage 8.28 rate computed to the nearest one-tenth of one percent that would 8.29 earn the same total finance charge at maturity of the contract 8.30 as would be earned by the application of the graduated rates 8.31 provided in paragraph (a), clause (2), when the debt is paid 8.32 according to the agreed terms and the calculations are made 8.33 according to the actuarial method. 8.34 (c) With respect to a loan, the finance charge must be 8.35 considered not to exceed the maximum annual percentage rate 8.36 permitted under this section if the finance charge contracted 9.1 for and received does not exceed the equivalent of the maximum 9.2 annual percentage rate calculated in accordance with Code of 9.3 Federal Regulations, title 12, part 226, but using the 9.4 definition of finance charge provided in this section. 9.5 (d) This subdivision does not limit or restrict the manner 9.6 of calculating the finance charge, whether by way of add-on, 9.7 discount, discount points, precomputed charges, single annual 9.8 percentage rate, variable rate, interest in advance, 9.9 compounding, average daily balance method, or otherwise, if the 9.10 annual percentage rate does not exceed that permitted by this 9.11 section. Discount points permitted by this paragraph and not 9.12 collected but included in the principal amount must not be 9.13 included in the amount on which credit life insurance premiums 9.14 are calculated and charged. 9.15 (e) With respect to a loan secured by real estate, if a 9.16 finance charge is calculated or collected in advance, or 9.17 included in the principal amount of the loan, and the borrower 9.18 prepays the loan in full, the financial institution shall credit 9.19 the borrower with a refund of the charge to the extent that the 9.20 annual percentage rate yield on the loan would exceed the 9.21 maximum rate permitted under paragraph (a), taking into account 9.22 the prepayment. The refund need not be made if it would be less 9.23 than $5. 9.24 (f) With respect to all other loans, if the finance charge 9.25 is calculated or collected in advance, or included in the 9.26 principal amount of the loan, and the borrower prepays the loan 9.27 in full, the financial institution shall credit the borrower 9.28 with a refund of the charge to the extent the annual percentage 9.29 rate yield on the loan would exceed the annual percentage rate 9.30 on the loan as originally determined under paragraph (a) and 9.31 taking into account the prepayment. The refund need not be made 9.32 if it would be less than $5. 9.33 (g) For the purpose of calculating the refund under this 9.34 subdivision, the financial institution may assume that the 9.35 contract was paid before the date of prepayment according to the 9.36 schedule of payments under the loan and that all payments were 10.1 paid on their due dates. 10.2 (h) For loans repayable in substantially equal successive 10.3 monthly installments, the financial institution may calculate 10.4 the refund under paragraph (f) as the portion of the finance 10.5 charge allocable on an actuarial basis to all wholly unexpired 10.6 payment periods following the date of prepayment, based on the 10.7 annual percentage rate on the loan as originally determined 10.8 under paragraph (a), and for the purpose of calculating the 10.9 refund may assume that all payments are made on the due date. 10.10 (i) The dollar amounts in this subdivision and subdivision 10.11 6, paragraph (a), clause (4), shall change periodically, as 10.12 provided in this section, according to and to the extent of 10.13 changes in the implicit price deflator for the gross domestic 10.14 product, 1987 = 100, compiled by the United States Department of 10.15 Commerce, and hereafter referred to as the index. The index for 10.16 December 1991 is the reference base index for adjustments of 10.17 dollar amounts. 10.18 (j) The designated dollar amounts shall change on July 1 of 10.19 each even-numbered year if the percentage of change, calculated 10.20 to the nearest whole percentage point, between the index for 10.21 December of the preceding year and the reference base index is 10.22 ten percent or more; but 10.23 (1) the portion of the percentage change in the index in 10.24 excess of a multiple of ten percent shall be disregarded and the 10.25 dollar amounts shall change only in multiples of ten percent of 10.26 the amounts appearing in Laws 1995, chapter 202, on May 24, 10.27 1995; and 10.28 (2) the dollar amounts shall not change if the amounts 10.29 required by this section are those currently in effect pursuant 10.30 to Laws 1995, chapter 202, as a result of earlier application of 10.31 this section. 10.32 (k) If the index is revised, the percentage of change 10.33 pursuant to this section shall be calculated on the basis of the 10.34 revised index. If a revision of the index changes the reference 10.35 base index, a revised reference base index shall be determined 10.36 by multiplying the reference base index then applicable by the 11.1 rebasing factor furnished by the department of commerce. If the 11.2 index is superseded, the index referred to in this section is 11.3 the one represented by the department of commerce as reflecting 11.4 most accurately changes in the purchasing power of the dollar 11.5 for consumers. 11.6 (l) The commissioner shall announce and publish: 11.7 (1) on or before April 30 of each year in which dollar 11.8 amounts are to change, the changes in dollar amounts required by 11.9 paragraph (j); and 11.10 (2) promptly after the changes occur, changes in the index 11.11 required by paragraph (k) including, if applicable, the 11.12 numerical equivalent of the reference base index under a revised 11.13 reference base index and the designation or title of any index 11.14 superseding the index. 11.15 (m) A person does not violate this chapter with respect to 11.16 a transaction otherwise complying with this chapter if that 11.17 person relies on dollar amounts either determined according to 11.18 paragraph (j), clause (2), or appearing in the last publication 11.19 of the commissioner announcing the then current dollar amounts. 11.20 (n) The adjustments provided in this section shall not be 11.21 affected unless explicitly provided otherwise by law. 11.22 Sec. 12. Minnesota Statutes 1996, section 47.59, 11.23 subdivision 12, is amended to read: 11.24 Subd. 12. [CONSUMER PROTECTIONS.] (a) Financial 11.25 institutions shall comply with the requirements of the federal 11.26 Truth in Lending Act, United States Code, title 15, sections 11.27 1601 to 1693, in connection with a consumer loan or credit sale 11.28 for a consumer purpose where the federal Truth in Lending Act is 11.29 applicable. However, (1) the dollar limit applicable to nonreal 11.30 estate credit is $50,000; and (2) the annual percentage rate 11.31 disclosure applicable to open-end revolving credit authorized by 11.32 this section is subject to the additional disclosure that takes 11.33 into consideration the effect of prepaid finance charges. This 11.34 annual percentage rate assumes a full advance of the available 11.35 credit and repayment according to the required terms without 11.36 consideration of the self-replenishing terms available. 12.1 (b) Financial institutions shall comply with the following 12.2 consumer protection provisions in connection with a consumer 12.3 loan or credit sale for a consumer purpose: sections 325G.02 to 12.4 325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to 12.5 325G.36, and Code of Federal Regulations, title 12, part 535, 12.6 where those statutes or regulations are applicable. 12.7 (c) An assignment of a consumer's earnings by the consumer 12.8 to a financial institution as payment or as security for payment 12.9 of a debt arising out of a consumer loan or consumer credit sale 12.10 is unenforceable by the financial institution and revocable by12.11 the consumerexcept where the assignment: (1) by its terms is 12.12 revocable at the will of the consumer; (2) is a payroll 12.13 deduction plan or preauthorized payment plan, beginning at the 12.14 time of the transaction, in which the consumer authorizes a 12.15 series of wage deductions as a method of making each payment; or 12.16 (3) applies only to wages or other earnings already earned at 12.17 the time of the assignment. 12.18 Sec. 13. Minnesota Statutes 1996, section 47.59, is 12.19 amended by adding a subdivision to read: 12.20 Subd. 15. [LENDER'S CREDIT CARD.] Paragraphs (a) to (g) 12.21 apply with respect to agreements for open-end credit according 12.22 to a lender's credit card. 12.23 (a) The periodic rate or rates of finance charge under the 12.24 agreement may be calculated on a daily, monthly, annual, or 12.25 other periodic basis provided for in the open-end credit 12.26 agreement if the annual percentage rate does not exceed the rate 12.27 authorized under subdivision 3. If the applicable periodic 12.28 percentage rate under the agreement is other than daily, a 12.29 periodic finance charge may be calculated on an amount equal to 12.30 the average of outstanding unpaid indebtedness for the 12.31 applicable billing period, determined by dividing the total of 12.32 the amounts of outstanding unpaid indebtedness for each day in 12.33 the applicable billing period by the number of days in the 12.34 billing period. If the applicable periodic percentage rate 12.35 under the agreement is monthly, a billing period is considered 12.36 to be a month or monthly if the last day of each billing period 13.1 is on the same day of each month or does not vary by more than 13.2 four days from that day. This charge may be compounded. 13.3 (b) If the open-end credit agreement so provides, the 13.4 periodic percentage rate or rates of finance charge under the 13.5 agreement may change from time to time according to a schedule 13.6 or formula or upon the happening of an event or circumstance 13.7 specified in the agreement. The periodic percentage rate or 13.8 rates, as changed, may be made applicable to all or any part of 13.9 outstanding unpaid indebtedness under the agreement on or after 13.10 the effective date of the change, including any indebtedness 13.11 arising out of purchases made or loans obtained before the 13.12 effective date of the change. 13.13 (c) If the balance of the open-end credit account subject 13.14 to this subdivision is attributable solely to purchases of goods 13.15 or services charged to the account during one billing cycle, and 13.16 the account is paid in full before the due date of the first 13.17 statement issued after the end of that billing cycle, no finance 13.18 charge shall be charged on that balance. 13.19 (d) A financial institution may at any time and from time 13.20 to time unilaterally extend to a borrower under an open-end 13.21 credit agreement the option of omitting monthly installments. 13.22 (e) A financial institution may, if the open-end agreement 13.23 so provides, at any time or from time to time, amend the terms 13.24 of the agreement according to clauses (1) to (6). 13.25 (1) The financial institution shall notify each affected 13.26 borrower of the amendment in the manner set forth in the 13.27 open-end credit agreement and in compliance with the 13.28 requirements of the Truth in Lending Act, United States Code, 13.29 title 15, section 1601, et seq., and the regulations adopted 13.30 under the act, as in effect from time to time, if applicable. 13.31 However, if the amendment has the effect of increasing the 13.32 periodic finance charges to be paid by the borrower, the 13.33 financial institution shall mail or deliver to the borrower, at 13.34 least 30 days before the effective date of the amendment, a 13.35 clear and conspicuous written notice describing the amendment 13.36 and setting forth the effective date of the amendment and the 14.1 other pertinent information contemplated by this subdivision. 14.2 (2) If the amendment has the effect of increasing the 14.3 periodic finance charges to be paid by the borrower, the 14.4 amendment must, except as otherwise provided for in this 14.5 subdivision, become effective as to a particular borrower, as of 14.6 the date specified in the notice of proposed amendment or as of 14.7 any later date, in either case, according to this section and as 14.8 stipulated in the notice, so long as the borrower does not, 14.9 within 30 days of the earlier of the mailing or delivery of the 14.10 notice of the amendment, furnish written notice to the financial 14.11 institution that the borrower does not agree to accept the 14.12 amendment. The notice from the financial institution must 14.13 include a statement that, absent the borrower's written notice 14.14 to the financial institution within 30 days of the earlier of 14.15 the mailing or delivery of the notice of the amendment that the 14.16 borrower does not agree to accept the amendment, the proposed 14.17 amendment will become effective, and the address to which a 14.18 borrower may send notice of the borrower's election not to 14.19 accept the amendment. A borrower who gives a timely notice 14.20 electing not to accept an amendment shall be permitted to pay 14.21 the outstanding unpaid indebtedness under the open-end credit 14.22 agreement according to the terms of the agreement without giving 14.23 effect to the amendment. If the borrower does not agree to 14.24 accept the proposed amendment, the financial institution may 14.25 terminate the borrower's right to make additional purchases or 14.26 obtain additional loans under the open-end credit agreement and 14.27 the borrower will continue to be subject to the terms of the 14.28 existing agreement until the outstanding unpaid indebtedness 14.29 under the agreement is paid in full. As a condition to the 14.30 effectiveness of a notice that a borrower does not accept the 14.31 amendment, the financial institution may require the borrower to 14.32 return to the financial institution any credit card that can be 14.33 used to access the agreement. If after 30 days from the mailing 14.34 or delivery by the financial institution of a proposed 14.35 amendment, a borrower obtains credit under an open-end credit 14.36 agreement through the use of a credit card or otherwise, 15.1 notwithstanding that the borrower has, before obtaining the 15.2 credit, given the financial institution notice that the borrower 15.3 does not accept an amendment, the amendment is considered to 15.4 have been accepted and becomes effective as of the date that the 15.5 amendment would have become effective but for the giving of 15.6 notice by the borrower. 15.7 (3) Notwithstanding clause (2), the financial institution 15.8 may also amend the open-end credit agreement by requiring that 15.9 an amendment becomes effective only if the borrower obtains 15.10 credit through the use of a credit card or otherwise after a 15.11 date specified in the notice of the proposed amendment by making 15.12 a purchase, obtaining a loan, or, expressly agreeing in writing 15.13 to the amendment. The date must be at least 30 days after the 15.14 giving of the notice, but need not be the date the amendment 15.15 becomes effective. The amendment may become effective as to a 15.16 particular borrower as of the first day of the billing period 15.17 during which the borrower obtained the credit or so indicated 15.18 agreement to the amendment. A borrower who fails to obtain the 15.19 credit or indicate agreement to an amendment shall be permitted 15.20 to pay the outstanding unpaid indebtedness in the borrower's 15.21 account under the open-end credit agreement according to the 15.22 terms of the agreement without giving effect to the amendment 15.23 subject to the right of the financial institution to terminate 15.24 the borrower's right to make additional purchases or obtain 15.25 additional loans under the open-end line of credit agreement as 15.26 provided in clause (2). 15.27 (4) If the terms of the open-end credit agreement so 15.28 provide, as originally drawn or as amended under this 15.29 subdivision, an amendment may, on and after the date upon which 15.30 it becomes effective as to a particular borrower, apply to all 15.31 outstanding unpaid indebtedness under the open-end credit 15.32 agreement, including indebtedness that has arisen out of 15.33 purchases made or loans obtained before the effective date of 15.34 the amendment, as well as to indebtedness arising out of 15.35 purchases made or loans obtained on or after the effective date 15.36 of the amendment. 16.1 (5) For the purposes of this subdivision, items (i) to 16.2 (iii) are not considered as amendments that have the effect of 16.3 increasing the interest to be paid by the borrower: 16.4 (i) a decrease in the required amount of periodic 16.5 installment payments; 16.6 (ii) a change in the schedule or formula used under a 16.7 variable rate open-end credit agreement under paragraph (a) if 16.8 the initial interest rate resulting from the change is not an 16.9 increase; and 16.10 (iii) a change from a daily periodic rate to a periodic 16.11 rate other than daily, or from a periodic rate other than daily 16.12 to a daily periodic rate if there is no resulting change in the 16.13 annual percentage rate as determined according to the Truth in 16.14 Lending Act and regulations adopted under the act, as in effect 16.15 from time to time. 16.16 (6) The procedures for amendment by a financial institution 16.17 of the terms of an open-end credit agreement to which a borrower 16.18 other than an individual borrower is a party may, in lieu of 16.19 paragraphs (a) to (e), be as the agreement may otherwise provide. 16.20 (f) An open-end credit agreement between a financial 16.21 institution located in Minnesota and a borrower, wherever the 16.22 borrower's place of residence, may be governed by the laws of 16.23 this state and federal law, if provided for in the agreement. 16.24 (g) All terms, conditions, and other provisions of and 16.25 relating to an open-end credit agreement that are authorized 16.26 under this section, including, without limitation, additional 16.27 charges authorized under subdivision 6, provisions relating to 16.28 the method of determining the outstanding unpaid indebtedness on 16.29 which finance charges are applied, provisions relating to free 16.30 ride periods, provisions relating to the financial institution's 16.31 right to terminate the open-end credit agreement, choice of law 16.32 provisions, change in terms provisions, provisions relating to 16.33 the right to charge and collect attorney fees and court costs, 16.34 and the computing of periodic finance charges, are considered to 16.35 be material to the determination of the interest rate under this 16.36 section and under the most favored lender doctrine, Section 85 17.1 of the National Bank Act, 49 Stat. 191 (1933); United States 17.2 Code, title 12, section 85; sections 521 to 523 of the 17.3 Depository Institutions Deregulation and Monetary Control Act of 17.4 1980, 94 Stat 132; United States Code, title 12, sections 1785 17.5 and 1831(d); and section 301 of the Financial Institutions 17.6 Reform, Recovery and Enforcement Act of 1989, 103 Stat. 280; 17.7 United States Code, title 12, section 1463(g), except that 17.8 additional charges under subdivision 6 must not be considered 17.9 finance charges for the purpose of calculating the numeric 17.10 limitation on finance charges under subdivision 3. 17.11 Sec. 14. Minnesota Statutes 1996, section 47.59, is 17.12 amended by adding a subdivision to read: 17.13 Subd. 16. [VIOLATIONS.] (a) A financial institution that 17.14 violates a provision of subdivision 15 forfeits its right to 17.15 collect interest in connection with the transaction in excess of 17.16 18 percent per year and is also subject to the remedies provided 17.17 in section 48.196. 17.18 (b) A financial institution that intentionally violates a 17.19 provision of subdivision 15 forfeits its right to collect 17.20 interest in connection with the transaction and is also subject 17.21 to the remedies provided in section 48.196. The criteria for 17.22 defining an intentional violation are those used in the Truth in 17.23 Lending Act, United States Code, title 15, section 1601, et 17.24 seq., and the regulations adopted under that act. 17.25 Sec. 15. Minnesota Statutes 1996, section 47.61, 17.26 subdivision 3, is amended to read: 17.27 Subd. 3. (a) "Electronic financial terminal" means an 17.28 electronic information processing device that is established to 17.29 do either or both of the following: 17.30 (1) capture the data necessary to initiate financial 17.31 transactions; or 17.32 (2) through its attendant support system, store or initiate 17.33 the transmission of the information necessary to consummate a 17.34 financial transaction. 17.35 (b) "Electronic financial terminal" does not include: 17.36 (1) a telephone; 18.1 (2) an electronic information processing device that is 18.2 used internally by a financial institution to conduct the 18.3 business activities of the institution; or18.4 (3) an electronic point-of-sale terminal operated by a 18.5 retailer that is used to process payments for the purchase of 18.6 goods and services by consumers, and which also may be used to 18.7 obtain cash advances or cash back not to exceed $25 and only if 18.8 incidental to the retail sale transactions, through the use of 18.9 credit cards or debit cards, provided that the payment 18.10 transactions using debit cards are subject to the federal 18.11 Electronic Funds Transfer Act, United States Code, title 12, 18.12 sections 1693 et seq., and Regulation E of the Federal Reserve 18.13 Board, Code of Federal Regulations, title 12, subpart 205.2; 18.14 this clause does not exempt the retailer from liability for 18.15 negligent conduct or intentional misconduct of the operator 18.16 under section 47.69, subdivision 5 .; 18.17 (4) stored-value cards to only process transactions other 18.18 than those authorized by this section. Stored-value cards are 18.19 transaction cards having magnetic stripes or computer chips that 18.20 enable electronic value to be added or deducted as needed; or 18.21 (5) a personal computer possessed by and operated 18.22 exclusively by the account holder. 18.23 Sec. 16. Minnesota Statutes 1996, section 48.01, 18.24 subdivision 2, is amended to read: 18.25 Subd. 2. [BANKING INSTITUTION.] The term "banking 18.26 institution" means any bank, trust company, bank and trust 18.27 company, or savings bank which is now or may hereafter be 18.28 organized under the laws of this state. For purposes of 18.29 sections 48.38, 48.84, and 501B.10501B.151, subdivision 611, 18.30 and to the extent permitted by federal law, "banking 18.31 institution" includes any national banking association or 18.32 affiliate exercising trust powers in this state. 18.33 Sec. 17. Minnesota Statutes 1996, section 48.09, is 18.34 amended by adding a subdivision to read: 18.35 Subd. 3. [QUALIFIED SUBCHAPTER S SUBSIDIARY.] A bank that 18.36 has met the eligibility requirements under title I, subtitle C 19.1 of the Small Business Job Protection Act of 1996 or related 19.2 state of Minnesota tax law may apply to the commissioner for 19.3 approval of a plan and agreement for a distribution of earnings 19.4 to the shareholder(s) of the bank on a basis other than a 19.5 dividend under subdivisions 1 and 2. Approval of a plan of 19.6 distribution under this subdivision may be rescinded by the 19.7 commissioner upon 90-day prior notice to the bank. Failure to 19.8 comply with this notice or qualification of a distribution under 19.9 subdivisions 1 and 2 is considered a violation subject to the 19.10 commissioner's action under section 45.027 or 46.24. 19.11 Sec. 18. Minnesota Statutes 1996, section 48.15, 19.12 subdivision 2, is amended to read: 19.13 Subd. 2. The commissioner of commerce may authorize banks, 19.14 bank and trust companies, or trust companies organized under the 19.15 laws of this state to engage in any banking or trust activity in 19.16 which banks subject to the jurisdiction of the federal 19.17 government may hereafter be authorized to engage by federal 19.18 legislation, ruling, or regulation and those activities 19.19 authorized in section 48.61, subdivision 7, paragraph (a), 19.20 clause (3). The commissioner may not authorize state banks as 19.21 defined by section 48.01, to engage in any bankingactivity 19.22 prohibited by the laws of this state. 19.23 Sec. 19. Minnesota Statutes 1996, section 48.185, 19.24 subdivision 3, is amended to read: 19.25 Subd. 3. A financial institution referred to in 19.26 subdivision 1 ,may operate a lender's credit card plan, except a 19.27 plan secured by property used or expected to be used as the 19.28 debtor's principal residence, on the terms and conditions in 19.29 section 47.59 that apply to open-end credit. If under an 19.30 overdraft checking plan, including a debit card, a financial 19.31 institution may collect a periodic rate of finance charge in 19.32 connection with extensions of credit under this section, which 19.33 finance charge does not exceed the equivalent of an annual 19.34 percentage rate of 18 percent computed on a 365-day year and in 19.35 accordance with the Truth in Lending Act, United States Code, 19.36 title 15, section 1601 et seq., and the Code of Federal 20.1 Regulations, title 12, part 226 (1985). 20.2 If credit is extended pursuant to an overdraft checking 20.3 plan on the day on which an increase in the periodic rate of 20.4 finance charge is made effective pursuant to this section, the 20.5 rate in effect prior to the increase shall be the maximum lawful 20.6 rate chargeable on the amount of credit so extended until that 20.7 credit is fully repaid according to the terms of the plan. 20.8 Sec. 20. Minnesota Statutes 1996, section 48.185, 20.9 subdivision 4, is amended to read: 20.10 Subd. 4. No charges other than those provided for in 20.11 subdivision 3 shall be made directly or indirectly for any 20.12 credit extended under the authority of this section according to 20.13 an overdraft checking plan, except that there may be charged to 20.14 the debtor: 20.15 (a) annual charges, not to exceed $50 per annum, payable in20.16 advance, for the privilege of using a bank credit card;20.17 (b)charges for premiums on credit life, credit accident 20.18 and health, and credit involuntary unemployment insurance if: 20.19 (1) the insurance is not required by the financial 20.20 institution and this fact is clearly disclosed in writing to the 20.21 debtor; and 20.22 (2) the debtor is notified in writing of the cost of the 20.23 insurance and affirmatively elects, in writing, to purchase the 20.24 insurance; 20.25 (c)(b) charges for the use of an automated teller machine 20.26 when cash advances are obtained pursuant to this section through 20.27 the use of an automated teller machine; 20.28 (d)(c) in the case of a financial institution referred to 20.29 in subdivision 1 that does not charge an annual fee, delinquency 20.30 and collection charges as follows: 20.31 (1) on each payment in arrears for a period not less than 20.32 ten days, in an amount not in excess of the delinquency and 20.33 collection charge permitted in section 168.71; 20.34 (2) for any monthly or other periodic payment period where 20.35 the debtor has exceeded or thereby exceeds the maximum approved 20.36 credit limit under the open-end loan account arrangement, in an 21.1 amount not in excess of the service charge limitations in 21.2 section 332.50; and 21.3 (3) for any returned check or returned automatic payment 21.4 withdrawal request, in an amount not in excess of the service 21.5 charge limitation in section 332.50; and 21.6 (e)(d) to the extent not otherwise prohibited by law, 21.7 charges for other goods or services offered by or through a 21.8 financial institution referred to in subdivision 1 which the 21.9 debtor elects to purchase, including, but not limited to, 21.10 charges for check and draft copies and for the replacement of 21.11 lost or stolen cards. 21.12 Sec. 21. Minnesota Statutes 1996, section 48.24, 21.13 subdivision 2, is amended to read: 21.14 Subd. 2. Loans not exceeding 25 percent of such capital 21.15 and surplus made upon first mortgage security on improved real 21.16 estate in the state or in an adjoining state within 20 miles of21.17 the placewhere the bank or a branch of the bank established 21.18 according to section 49.411 is located, shall not constitute a 21.19 liability of the maker of the notes secured by such mortgages 21.20 within the meaning of the foregoing provision limiting 21.21 liability, but shall be an actual liability of the maker. These 21.22 mortgage loans shall be limited to, and in no case exceed, 50 21.23 percent of the cash value of the security covered by the 21.24 mortgage, except mortgage loans guaranteed as provided by the 21.25 servicemen's readjustment act of 1944, as now or hereafter 21.26 amended, or for which there is a commitment to so guarantee or 21.27 for which a conditional guarantee has been issued, which loans 21.28 shall in no case exceed 60 percent of the cash value of the 21.29 security covered by such mortgage. For the purposes of this 21.30 subdivision, real estate is improved when substantial and 21.31 permanent development or construction has contributed 21.32 substantially to its value, and agricultural land is improved 21.33 when farm crops are regularly raised on such land without 21.34 further substantial improvements. 21.35 Sec. 22. Minnesota Statutes 1996, section 48.24, is 21.36 amended by adding a subdivision to read: 22.1 Subd. 9. [RIGHT TO ACT TO AVOID LOSS.] This section does 22.2 not prohibit the bank from advancing funds that may be 22.3 reasonably necessary to avoid loss on a loan or investment made 22.4 subject to this section or an obligation created in good faith. 22.5 The rights under this subdivision are in addition to and not 22.6 inconsistent with section 48.21. 22.7 Sec. 23. [48.476] [REPRESENTATIVE TRUST OFFICE.] 22.8 Subdivision 1. [DEFINITIONS.] For purposes of this 22.9 section, the terms in this subdivision have the meanings given. 22.10 (a) "Representative trust office" means an office at which 22.11 a trust company or bank with trust powers has been authorized by 22.12 the commissioner to engage in a trust business other than acting 22.13 as a fiduciary. 22.14 (b) "Acting as a fiduciary" means to: 22.15 (1) accept or execute trusts, including to: 22.16 (i) act as trustee under a written agreement; 22.17 (ii) receive money or other property in its capacity as a 22.18 trustee for investment in real or personal property; 22.19 (iii) act as trustee and perform the fiduciary duties 22.20 committed or transferred to it by order of court of competent 22.21 jurisdiction; 22.22 (iv) act as trustee of the estate of a deceased person; or 22.23 (v) act as trustee for a minor or incapacitated person; 22.24 (2) administer in any other fiduciary capacity real or 22.25 personal property; or 22.26 (3) act according to order of court of competent 22.27 jurisdiction as executor or administrator of the estate of a 22.28 deceased person or as a guardian or conservator for a minor or 22.29 incapacitated person. 22.30 Subd. 2. [AUTHORITY FOR REPRESENTATIVE TRUST OFFICES; 22.31 PRIOR WRITTEN NOTICE.] (a) A state trust institution may 22.32 establish or acquire and maintain representative trust offices 22.33 anywhere in this state. A state trust institution desiring to 22.34 establish or acquire and maintain such an office shall file a 22.35 written notice with the commissioner setting forth the name of 22.36 the state trust institution and the location of the proposed 23.1 additional office, furnish a copy of the resolution adopted by 23.2 the board authorizing the additional office, and pay the filing 23.3 fee of $250. 23.4 (b) The state trust institution may begin business at the 23.5 additional office on the 31st day after the date the 23.6 commissioner receives the notice, unless the commissioner 23.7 specifies an earlier or later date. 23.8 (c) The 30-day period of review may be extended by the 23.9 commissioner on a determination that the written notice raises 23.10 issues that require additional information or additional time 23.11 for analysis. If the period of review is extended, the state 23.12 trust institution may establish the additional office only on 23.13 prior written approval by the commissioner. 23.14 (d) The commissioner may deny approval of the additional 23.15 office if the commissioner finds that the state trust 23.16 institution lacks sufficient financial resources to undertake 23.17 the proposed expansion without adversely affecting its safety or 23.18 soundness or that the proposed office would be contrary to the 23.19 public interest. 23.20 Subd. 3. [AUTHORITY FOR OUT-OF-STATE TRUST OFFICES; PRIOR 23.21 WRITTEN NOTICE.] (a) A state trust institution may establish and 23.22 maintain representative trust office or acquire and maintain an 23.23 office in a state other than this state. A state trust 23.24 institution desiring to establish or acquire and maintain an 23.25 office in another state under this section shall file a notice 23.26 on a form prescribed by the commissioner, which shall set forth 23.27 the name of the state trust institution, the location of the 23.28 proposed office, and whether the laws of the jurisdiction where 23.29 the office will be located permit the office to be maintained by 23.30 the state trust institution; furnish a copy of the resolution 23.31 adopted by the board authorizing the out-of-state office; and 23.32 pay the filing fee of $250. 23.33 (b) The state trust institution may begin business at the 23.34 additional office on the 31st day after the date the 23.35 commissioner receives the notice, unless the commissioner 23.36 specifies an earlier or later date. 24.1 (c) The 30-day period of review may be extended by the 24.2 commissioner on a determination that the written notice raises 24.3 issues that require additional information or additional time 24.4 for analysis. If the period of review is extended, the state 24.5 trust institution may establish the additional office only on 24.6 prior written approval by the commissioner. 24.7 (d) The commissioner may deny approval of the additional 24.8 office if the commissioner finds that the state trust 24.9 institution lacks sufficient financial resources to undertake 24.10 the proposed expansion without adversely affecting its safety or 24.11 soundness or that the proposed office would be contrary to the 24.12 public interest. In acting on the notice, the commissioner 24.13 shall consider the views of the appropriate bank supervisory 24.14 agencies. 24.15 Sec. 24. Minnesota Statutes 1996, section 48.512, is 24.16 amended by adding a subdivision to read: 24.17 Subd. 4a. [IDENTIFICATION NOT REQUIRED FOR DEBIT CARD 24.18 TRANSACTIONS.] The identification requirements of subdivision 4 24.19 do not apply to a transaction account that is accessible 24.20 exclusively by debit card. A debit card activates a transaction 24.21 account at a financial intermediary by means of an electronic 24.22 information processing device and contemporaneously completes 24.23 the debt to the account only on the condition that funds are 24.24 available and confirmed. 24.25 Sec. 25. Minnesota Statutes 1996, section 48.512, is 24.26 amended by adding a subdivision to read: 24.27 Subd. 11. [FORMAL POLICY DEVELOPMENT; REQUIRED SIGHT DRAFT 24.28 DISCLOSURE.] A financial intermediary offering transaction 24.29 accounts shall by board resolution adopt a policy to be enforced 24.30 internally regarding the following: 24.31 (1) the standards identify a level of misuse by customers 24.32 for purposes of enforcing the deterrence objectives of 24.33 subdivision 7; 24.34 (2) the method of disclosing to the customer the risks 24.35 related to providing account identification information to third 24.36 parties for purposes of authorizing their issuance of sight 25.1 drafts; and 25.2 (3) the method of informing the customer of the privacy 25.3 terms related to the bank's use of customer personal information. 25.4 Sec. 26. Minnesota Statutes 1996, section 48.61, 25.5 subdivision 7, is amended to read: 25.6 Subd. 7. [SUBSIDIARIES.] (a) A state bank or trust company 25.7 may organize, acquire, or invest in a subsidiary located in this 25.8 state for the purposes of engaging in one or more of the 25.9 following activities, subject to the prior written approval of 25.10 the commissioner: 25.11 (1) any activity, not including receiving deposits or 25.12 paying checks, that a state bank is authorized to engage in 25.13 under state law or rule or under federal law or regulation 25.14 unless the activity is prohibited by the laws of this state; 25.15 (2) any activity that a bank clerical service corporation 25.16 is authorized to engage in under section 48.89; and 25.17 (3) any other activity authorized for a national bank, a 25.18 bank holding company, or a subsidiary of a national bank or bank 25.19 holding company under federal law or regulation of general 25.20 applicability, and approved by the commissioner by rule. 25.21 (b) A bank or trust company subsidiary may engage in an 25.22 activity under this section only upon application together with 25.23 a filing fee of $250 and with the prior written approval of the 25.24 commissioner. In approving or denying a proposed activity, the 25.25 commissioner shall consider the financial and management 25.26 strength of the bank or trust company, the current written 25.27 operating plan and policies of the proposed subsidiary 25.28 corporation, the bank or trust company's community reinvestment 25.29 record, and whether the proposed activity should be conducted 25.30 through a subsidiary of the bank or trust company. 25.31 (c) The aggregate amount of funds invested in either an 25.32 equity or loan capacity in all of the subsidiaries of the bank 25.33 or trust company authorized under this subdivision shall not 25.34 exceed 25 percent of the capital stock and paid in surplus of 25.35 the bank or trust company. 25.36 (d) A subsidiary organized or acquired under this 26.1 subdivision is subject to the examination and enforcement 26.2 authority of the commissioner under chapters 45 and 46 to the 26.3 same extent as a state bank or trust company. 26.4 (e) For the purposes of this section, "subsidiary" means a 26.5 corporation of which more than 50 percent of the voting shares 26.6 are owned or controlled by the bank or trust company. 26.7 Sec. 27. Minnesota Statutes 1996, section 48.61, is 26.8 amended by adding a subdivision to read: 26.9 Subd. 10. [SUBSIDIARIES ORGANIZED FOR PURPOSES OF 26.10 CORPORATE REORGANIZATION.] A subsidiary may be organized solely 26.11 for purposes of liquidating assets in a reorganization subject 26.12 to the following conditions: 26.13 (1) the subsidiary must be a bank holding company whose 26.14 assets and liabilities and subsidiary bank control have been 26.15 removed; and 26.16 (2) the operations of the subsidiary must be limited to the 26.17 time period reasonably related to the completion of the 26.18 reorganization. 26.19 Sec. 28. Minnesota Statutes 1996, section 49.215, 26.20 subdivision 3, is amended to read: 26.21 Subd. 3. [CERTIFICATE OF LIQUIDATION.] Upon compliance 26.22 with the foregoing and upon filing with the commissioner an 26.23 affidavit of the president and cashier or vice president 26.24 conducting the duties of cashier of said financial institution 26.25 that the provisions of subdivision 4 have been complied with and 26.26 that all depositors and other creditors have been paid in full, 26.27 or, if any dividends or any moneys set apart for the payment of 26.28 claims remain unpaid and the places of residence of the 26.29 depositors or other creditors are unknown to the persons making 26.30 the affidavit, that sufficient funds have been turned over to 26.31 the commissioner for payment into the state treasury to pay said 26.32 depositors and other creditors, in the manner provided by 26.33 subdivision 5, the commissioner shall issue a certificate of 26.34 liquidation, and, upon the filing for record of said certificate 26.35 of liquidation in the office of the secretary of state and in 26.36 the office of the county recorder of the county of the principal 27.1 place of business of such financial institution immediately 27.2 prior to its voluntary liquidation, the liquidation of said 27.3 financial institution shall be complete, and its corporate 27.4 existence shall thereupon terminate. 27.5 Sec. 29. Minnesota Statutes 1996, section 49.33, is 27.6 amended to read: 27.7 49.33 [CONSOLIDATION AND MERGER, WHEN AUTHORIZED.] 27.8 Subject to the provisions of sections 49.33 to 49.41, with 27.9 the written consent of the commissioner of commerce, any bank of27.10 discount and deposit, savings bank, or trust company may effect 27.11 a transfer of its assets and liabilities to another bank, 27.12 savings bank, or trust company for the purpose of consolidating 27.13 or merging, but the same shall be without prejudice to the 27.14 creditors of either. 27.15 Sec. 30. Minnesota Statutes 1996, section 49.42, is 27.16 amended to read: 27.17 49.42 [STATE BANK.] 27.18 As used in sections 49.42 to 49.46: 27.19 "State bank" means any bank, savings bank, trust company, 27.20 or bank and trust company which is now or may hereafter be 27.21 organized under the laws of this state. 27.22 "National banking association" means a bank, savings bank, 27.23 bank and trust company, or bank exclusively exercising trust 27.24 powers organized under the laws of the United States. 27.25 Sec. 31. Minnesota Statutes 1996, section 50.245, is 27.26 amended to read: 27.27 50.245 [BRANCHES; ACQUISITIONS.] 27.28 Subdivision 1. [AUTHORITY FOR BRANCH OFFICES.] A savings 27.29 bank may establish any number of detached facilities as may be 27.30 approved by the commissioner of commerce pursuant to sections 27.31 47.51 to 47.57. The savings bank shall not change the location 27.32 of a detached facility without prior written approval of the 27.33 commissioner of commerce. A savings bank may establish a loan 27.34 production office, without restriction as to geographical 27.35 location, upon written notice to the commissioner of commerce. 27.36 Subd. 2. [AUTHORITY FOR BRANCH OFFICES IN OTHER STATES.] 28.1 The authorization contained in subdivision 1 is in addition to 28.2 the authority granted savings banks in section 47.52. A savings 28.3 bank chartered in this state, whether or not the subsidiary of a 28.4 savings bank holding company, may, by acquisition, merger,28.5 purchase, and assumption of some or all assets and liabilities,28.6 consolidation, or de novo formation, establish or operate28.7 detached facilities in another state on the same terms and28.8 conditions and subject to the same limitations and restrictions28.9 as are applicable to the establishment of branches by national28.10 banks located in Minnesota, except that approval of the28.11 comptroller of the currency shall not be required for such28.12 detached facilitieshas the same authority as a bank to conduct 28.13 interstate mergers affecting interstate branching under section 28.14 49.411. The merger may be between banks and with other banks or 28.15 savings banks. 28.16 Subd. 3. [ RECIPROCATING STATEINTERSTATE ACQUISITIONS.] A 28.17 savings bank chartered in this state and a savings bank holding 28.18 company with its principal offices in this state may acquire 28.19 control of a financial institution chartered in a reciprocating28.20 state or, subject to applicable federal law,any other state or 28.21 a financial institution holding company with principal offices 28.22 in a reciprocating state or, subject to applicable federal law,28.23 any other state. A savings bank chartered in a reciprocating28.24 state or, subject to applicable federal law,any other state and 28.25 a savings bank holding company with principal offices in a28.26 reciprocating state or, subject to applicable federal law,any 28.27 other state may acquire control of a savings bank chartered in 28.28 this state or a savings bank holding company with principal 28.29 offices in this state. 28.30 Subd. 4. [PROCEDURAL REQUIREMENTS.] Procedural 28.31 requirements equivalent to thosecontained in sections 48.90 to 28.32 48.99548.99 apply to reciprocalinterstate branching and28.33 acquisitions by savings banks and savings bank holding companies. 28.34 Subd. 5. [DEFINITIONS.] For the purpose of this section, 28.35 the terms defined in this subdivision have the meanings given 28.36 them. 29.1 (a) "Financial institution" means a bank, savings bank, 29.2 savings association, or trust company, or credit union,whether 29.3 chartered under the laws of this state, another state or 29.4 territory, or under the laws of the United States. 29.5 (b) "Loan production office" means a place of business at 29.6 which a savings bank provides lending if the loans are approved 29.7 at the main office or detached facility of the savings bank, but 29.8 at which a savings bank may not accept deposits except through a 29.9 remote service unit. 29.10 (c) "Reciprocating state" means a state that authorizes the29.11 acquisition of control of financial institutions chartered in29.12 that state and financial institution holding companies with29.13 principal offices in that state by a savings bank chartered in29.14 this state or savings bank holding company with principal29.15 offices in this state under conditions substantially similar to29.16 those imposed by the laws of Minnesota, as determined by the29.17 commissioner of commerce.29.18 (d)"Remote service unit" means an electronic financial 29.19 terminal as defined in section 47.61. 29.20 Subd. 6. [COMMISSIONER'S AUTHORITY.] The authority of the29.21 commissioner of commerce to approve a transaction under this29.22 section is in addition to that provided for in section 184.108.40.206 Sec. 32. Minnesota Statutes 1996, section 51A.38, 29.24 subdivision 1, is amended to read: 29.25 Subdivision 1. [GENERALLY.] Real estate loans and other 29.26 loans secured by a mortgage on real estate that are eligible for 29.27 investment by an association under sections 51A.01 to 51A.57 may 29.28 be written according to this section and section 29.29 51A.38551A.386, or upon any other plan approved by the 29.30 commissioner. 29.31 Sec. 33. Minnesota Statutes 1996, section 52.04, 29.32 subdivision 2a, is amended to read: 29.33 Subd. 2a. [CREDIT SALES OR SERVICE CONTRACTS.] A person 29.34 may enter into a credit sale or service contract for sale to a 29.35 state or federal credit union doing business in this state, and 29.36 a credit union may purchase and enforce the contract under the 30.1 terms and conditions set forth in section 47.59, subdivisions 30.2 4 and 6to 14. 30.3 Sec. 34. Minnesota Statutes 1996, section 52.04, is 30.4 amended by adding a subdivision to read: 30.5 Subd. 3. [COMPARABILITY WITH FEDERAL CREDIT UNIONS.] The 30.6 commissioner of commerce may authorize credit union activity in 30.7 which credit unions subject to the jurisdiction of the federal 30.8 government may be authorized to engage by federal legislation, 30.9 ruling, or regulation. The commissioner may not authorize state 30.10 credit unions subject to this chapter to engage in credit union 30.11 activity prohibited by the laws of this state. 30.12 Sec. 35. Minnesota Statutes 1996, section 52.062, 30.13 subdivision 1, is amended to read: 30.14 Subdivision 1. [REASONS FOR COMMISSIONER'S ACTION.] 30.15 Whenever the commissioner of commerce shall find that a credit 30.16 union is engaged in unsafe or unsound practices in conducting 30.17 its business or that the shares of the members are impaired or 30.18 are in immediate danger of becoming impaired, or that such 30.19 credit union has knowingly or negligently permitted any of its 30.20 officers, directors, committee members, or employees to violate 30.21 any material provision of any law, bylaw, or rule to which the 30.22 credit union is subject, the commissioner of commerce may 30.23 proceed in the manner provided by eithersubdivision 2 or, 3, or 30.24 4. 30.25 Sec. 36. Minnesota Statutes 1996, section 52.062, is 30.26 amended by adding a subdivision to read: 30.27 Subd. 4. [CONSENT CEASE AND DESIST ORDER.] In lieu of 30.28 suspension of the operation of the credit union, the 30.29 commissioner of commerce and the board of directors of the 30.30 credit union may agree to execute a consent cease and desist 30.31 order in which the parties agree to waive the right to a hearing 30.32 and agree that the credit union shall cease and desist from 30.33 unsafe or unsound practices, or violations. The order must 30.34 specify whether credit union operation may continue, and if 30.35 operation may continue, the conditions under which operation may 30.36 continue. 31.1 Sec. 37. Minnesota Statutes 1996, section 52.063, is 31.2 amended to read: 31.3 52.063 [PROCEEDINGS FOLLOWING SUSPENSION OR, CONTINUATION 31.4 OF SUSPENSION, OR CONSENT CEASE AND DESIST ORDER; APPOINTMENT OF 31.5 NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] 31.6 Subdivision 1. [PROCEEDINGS FOLLOWING SUSPENSION OR 31.7 CONTINUATION OF SUSPENSION.] Upon receipt of the suspension 31.8 notice or the notice of the continuation of suspension under 31.9 section 52.062, subdivision 2 or 3, the credit union shall 31.10 immediately cease or continue cessation of all operations except 31.11 those operations specifically authorized by the commissioner of 31.12 commerce. If the notice is given pursuant to determination by 31.13 the commissioner of commerce after a hearing, the board of 31.14 directors shall have 60 days from the receipt of said notice in 31.15 which to file with the commissioner of commerce a proposed plan 31.16 of corrective actions or to request that a receiver be appointed 31.17 for the credit union. The commissioner of commerce shall have 31.18 30 days from the receipt of the proposed plan of corrective 31.19 actions to determine if the proposed corrective actions are 31.20 sufficient to correct the deficiencies which formed the basis 31.21 for the suspension. If the commissioner of commerce determines 31.22 that the proposed corrective actions are sufficient, the 31.23 suspension shall be lifted and the credit union returned to 31.24 normal operations under its board of directors. If the 31.25 commissioner of commerce believes the proposed corrective 31.26 actions insufficient, or if the board has failed to answer the 31.27 suspension notice, or has requested that a receiver be 31.28 appointed, then the commissioner of commerce shall apply to the 31.29 district court for appointment of a receiver. The credit union 31.30 shall have the right, within six months of the receipt of any 31.31 notice of suspension or continuation of suspension pursuant to a 31.32 determination by the commissioner of commerce after hearing, to 31.33 appeal to the district court for a ruling as to the validity of 31.34 such notice. 31.35 Subd. 2. [PROCEEDINGS FOLLOWING CONSENT CEASE AND DESIST 31.36 ORDER.] If the commissioner of commerce and the board of 32.1 directors of the credit union execute a consent cease and desist 32.2 order in lieu of a suspension under section 52.062, subdivision 32.3 4, the board of directors of the credit union may request that 32.4 the commissioner of commerce seek court appointment of a 32.5 receiver for the credit union. The consent cease and desist 32.6 order must state that the credit union has requested that the 32.7 commissioner seek appointment of a receiver. 32.8 Subd. 3. [APPOINTMENT OF NATIONAL CREDIT UNION 32.9 ADMINISTRATION BOARD AS RECEIVER.] Upon a request by the 32.10 commissioner of commerce, the court may appoint the National 32.11 Credit Union Administration Board, created by section 3 of the 32.12 Federal Credit Union Act, as amended, as receiver of a credit 32.13 union, without bond, when the deposits of the credit union are 32.14 to any extent insured by the National Credit Union 32.15 Administration Board, and the credit union has had its 32.16 operations suspended or has executed a consent cease and desist 32.17 order with the commissioner in lieu of a suspension under 32.18 section 52.062. Notwithstanding any other provisions of law, 32.19 the commissioner of commerce may, in the event of the suspension 32.20 or consent cease and desist order, tender to the National Credit 32.21 Union Administration Board the proposed appointment as receiver 32.22 of the credit union. If the National Credit Union 32.23 Administration Board accepts the proposed appointment and the 32.24 court appoints the National Credit Union Administration Board as 32.25 receiver upon a request by the commissioner, the National Credit 32.26 Union Administration Board shall have and possess all the powers 32.27 and privileges provided by the laws of this state and section 32.28 207 of the Federal Credit Union Act, as amended, with respect to 32.29 a receiver of a credit union, the board of directors of the 32.30 credit union, and its members. 32.31 Sec. 38. Minnesota Statutes 1996, section 52.064, is 32.32 amended by adding a subdivision to read: 32.33 Subd. 3. [WAIVER WHEN CREDIT UNION REQUESTS APPOINTMENT OF 32.34 NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] If the 32.35 board of directors of the credit union has made a request to the 32.36 commissioner of commerce to seek court appointment of the 33.1 National Credit Union Administration Board as its receiver, and 33.2 the commissioner elects to seek this appointment, then the board 33.3 of directors of the credit union may waive the right to apply to 33.4 the court for permission to file, and the right to file, a plan 33.5 of reorganization, merger, or consolidation for the credit union 33.6 within 90 days of the appointment of the receiver under 33.7 subdivision 1. The board of directors of the credit union may 33.8 waive this right on behalf of itself, and on behalf of the 33.9 members of the credit union, when the board of directors of the 33.10 credit union determines that such action is in the best 33.11 interests of the credit union and its members, so that the 33.12 deposit insurer may proceed expeditiously to wind up the affairs 33.13 of the credit union upon appointment as receiver. 33.14 Sec. 39. Minnesota Statutes 1996, section 52.201, is 33.15 amended to read: 33.16 52.201 [REORGANIZING FEDERAL CREDIT UNION INTO STATE CREDIT 33.17 UNION.] 33.18 When any federal credit union authorized to convert to a 33.19 state charter has taken the necessary steps under the federal 33.20 law for that purpose, seven or more members, upon authority of 33.21 two-thirds of the members present and entitled to vote and who 33.22 shall have voted for such conversion at a regular or special 33.23 meeting upon 14 days mailed written notice to each member at the 33.24 member's last known address clearly stating that such conversion 33.25 is to be acted upon, and upon approval of the commissioner of 33.26 commerce, may execute a certificate of incorporation under the 33.27 provisions of the state credit union act, which, in addition to 33.28 the other requirements of law, shall state the authority derived 33.29 from the shareholders of such federal credit union; and upon 33.30 recording such certificate as required by law, it shall become a 33.31 legal state credit union and the members of the federal credit 33.32 union shall without further action be members of the state 33.33 credit union. This includes members of the federal credit union 33.34 on the basis of acceptance of small employer group provided the 33.35 commissioner may require contemporaneous filing of applications 33.36 under section 52.05, subdivision 2. Thereupon the assets of the 34.1 federal credit union, subject to its liabilities not liquidated 34.2 under the federal law before such incorporation, shall vest in 34.3 and become the property of such state credit union and the 34.4 members upon request shall be entitled to a new passbook showing 34.5 existing share and loan balances. The commissioner of commerce 34.6 shall approve or disapprove of the conversion within 60 days of 34.7 the date the proposal is presented. 34.8 Sec. 40. Minnesota Statutes 1996, section 53.04, is 34.9 amended by adding a subdivision to read: 34.10 Subd. 5b. [NEGOTIABLE ORDER OF WITHDRAWAL 34.11 ACCOUNTS.] Notwithstanding section 53.05, clause (1), issue 34.12 negotiable order of withdrawal accounts, which may not be 34.13 referred to as checking accounts and may include the following 34.14 transactions: 34.15 (1) automatic (preauthorized) transfers for the purpose of 34.16 paying loans at the same institution; 34.17 (2) transfers or withdrawals made by mail, messenger, 34.18 automated teller machine, or in person as withdrawals or 34.19 transfers to another account of the depositor at the same 34.20 institution; 34.21 (3) withdrawals initiated by telephone and consummated by 34.22 an official check mailed to the depository; 34.23 (4) automated clearinghouse debits; 34.24 (5) transfers from a customer's account under a 34.25 preauthorized agreement to cover overdrafts on another 34.26 transaction account; 34.27 (6) drafts payable to third parties; and 34.28 (7) debit card transactions. 34.29 Agreements establishing negotiable order of withdrawal 34.30 accounts must include a prominent disclosure of the following: 34.31 "We reserve the right to at any time require not less than 34.32 seven days' notice in writing before each withdrawal from this 34.33 account." 34.34 A negotiable order of withdrawal account may be with or 34.35 without interest and is considered a transaction account for 34.36 purposes of section 48.512. 35.1 Before exercising this power, the company must submit a 35.2 plan to the commissioner detailing implementation of the power. 35.3 Sec. 41. Minnesota Statutes 1996, section 53.05, is 35.4 amended to read: 35.5 53.05 [POWERS, LIMITATION.] 35.6 No industrial loan and thrift company may do any of the 35.7 following: 35.8 (1) carry demand banking accounts; use the word "savings" 35.9 unless the institution's investment certificates, savings 35.10 accounts, and savings deposits are insured by the Federal 35.11 Deposit Insurance Corporation and then only if the word is not 35.12 followed by the words "and loan" in its corporate name; use the 35.13 word "bank" or "banking" in its corporate name; operate as a 35.14 savings bank; 35.15 (2) have outstanding at any one time certificates of 35.16 indebtedness, savings accounts, and savings deposits 30 times 35.17 the sum of capital stock and surplus of the company; 35.18 (3) accept trusts, except as provided in section 47.75, 35.19 subdivision 1, or act as guardian, administrator, or judicial 35.20 trustee in any form; 35.21 (4) deposit any of its funds in any banking corporation, 35.22 unless that corporation has been designated by vote of a 35.23 majority of directors or of the executive committee present at a 35.24 meeting duly called, at which a quorum was in attendance; 35.25 (5) change any allocation of capital made pursuant to 35.26 section 53.03 or reduce or withdraw in any way any portion of 35.27 the capital stock and surplus without prior written approval of 35.28 the commissioner of commerce; 35.29 (6) take any instrument in which blanks are left to be 35.30 filled in after execution; 35.31 (7) lend money in excess of 20 percent of the total of its 35.32 capital stock and surplus at all its authorized locations to a 35.33 person primarily liable. Companies not issuing investment 35.34 certificates of indebtedness under section 53.04 need not comply 35.35 with the requirement if the amount of money lent does not exceed 35.36 $100,000 of principal as defined by section 47.59, subdivision 36.1 1, paragraph (p). 36.2 However, industrial loan and thrift companies with deposit 36.3 liabilities must comply with the provisions of section 48.24; or 36.4 (8) issue cashier's checks pursuant to section 48.151, 36.5 unless and at all times the aggregate liability to all creditors 36.6 on these instruments is protected by a special fund in cash or 36.7 due from banks to be used solely for payment of the cashier's 36.8 checks. 36.9 Sec. 42. Minnesota Statutes 1996, section 53.09, 36.10 subdivision 2a, is amended to read: 36.11 Subd. 2a. [COMPLIANCE EXAMINATIONS.] For the purpose of 36.12 discovering violations of this chapter or securing information 36.13 lawfully required by the commissioner under this chapter, the 36.14 commissioner may, at any time, either personally or by a person 36.15 or persons duly designated, investigate the loans and business, 36.16 and examine the books, accounts, records, and files used in the 36.17 business, of every licensee and of every person engaged in the 36.18 business whether or not the person acts or claims to act as 36.19 principal or agent, or under the authority of this chapter. For 36.20 the purposes of this subdivision, the commissioner and duly 36.21 designated representatives have free access to the offices and 36.22 places of business, books, accounts, papers, records, files, 36.23 safes, and vaults of all these persons. The commissioner and 36.24 all persons duly designated may require the attendance of and 36.25 examine, under oath, all persons whose testimony the 36.26 commissioner may require relative to the loans or business or to 36.27 the subject matter of an examination, investigation, or 36.28 hearing. Upon written agreement with the company, the 36.29 commissioner may conduct examinations applying the procedures 36.30 for purposes of subdivision 1, and section 46.04, subdivision 1, 36.31 to facilitate the qualifications of the company to participate 36.32 in the United States Small Business Administration loan 36.33 guarantee or similar programs. 36.34 Each licensee shall pay to the commissioner the amount 36.35 required under section 46.131, and the commissioner may maintain 36.36 an action for the recovery of the costs in a court of competent 37.1 jurisdiction. 37.2 Sec. 43. Minnesota Statutes 1996, section 55.06, 37.3 subdivision 1, is amended to read: 37.4 Subdivision 1. [PROHIBITION.] No person except a bank, a 37.5 savings bank, a credit union, a savings association, industrial 37.6 loan and thrift company issuing investment certificates of 37.7 indebtedness, or a trust company may let out or rent as lessor, 37.8 for hire, safe deposit boxes or take or receive valuable 37.9 personal property for safekeeping and storage, as bailee, for 37.10 hire, without procuring a license and giving a bond, as required 37.11 by this chapter, except as otherwise authorized by law so to do. 37.12 Sec. 44. Minnesota Statutes 1996, section 56.07, is 37.13 amended to read: 37.14 56.07 [CONTROL OVER LOCATION.] 37.15 Subdivision 1. [GENERAL.] Not more than one place of 37.16 business shall be maintained under the same license, but the 37.17 commissioner may issue more than one license to the same 37.18 licensee upon compliance with all the provisions of this chapter 37.19 governing an original issuance of a license, for each such new 37.20 license. To the extent that previously filed applicable 37.21 information remains substantially unchanged, the applicant need 37.22 not refile this information, unless requested. 37.23 When a licensee shall wish to change a place of business, 37.24 the licensee shall give written notice thereof 30 days in 37.25 advance to the commissioner, who shall within 30 days of receipt 37.26 of such notice, issue an amended license approving the change. 37.27 No change in the place of business of a licensee to a location 37.28 outside of its current trade area or more than 25 miles from its 37.29 present location, whichever distance is greater, shall be 37.30 permitted under the same license unless all of the requirements 37.31 of section 56.04 have been met. 37.32 A licensed place of business shall be open during regular37.33 business hours each weekday, except for legal holidays and for37.34 any weekday the commissioner grants approval to the licensee to37.35 remain closed. A licensed place of business may be open on37.36 Saturday, but shall be closed on Sunday.A licensed location 38.1 must be open for business and examination purposes on a schedule 38.2 provided to and approved by the commissioner. This schedule of 38.3 regular business must be conspicuously posted at the licensed 38.4 location. 38.5 Subd. 2. [INTERACTIVE KIOSK LOCATIONS.] Licensed locations 38.6 providing limited services on an interactive telephone-customer 38.7 service communications terminal are required to comply with 38.8 paragraphs (a) to (c). 38.9 (a) The licensee must maintain business books, accounts, 38.10 and records on a suitable alternative system of maintenance 38.11 approved by the commissioner. 38.12 (b) The license required to be posted under section 56.05 38.13 may be displayed on the customer service communications terminal 38.14 screen for a period of no less than 15 seconds. 38.15 (c) The full and accurate schedule of charges required by 38.16 section 56.14, clause (5), may be displayed on the customer 38.17 service communications terminal screen for no less than 20 38.18 seconds. 38.19 Sec. 45. Minnesota Statutes 1996, section 56.10, 38.20 subdivision 1, is amended to read: 38.21 Subdivision 1. For the purpose of discovering violations 38.22 of this chapter or securing information lawfully required by the 38.23 commissioner hereunder, the commissioner may, at any time, 38.24 either personally or by a person or persons duly designated, 38.25 investigate the loans and business and examine the books, 38.26 accounts, records, and files used therein, of every licensee and 38.27 of every person who shall be engaged in the business described 38.28 in section 56.01, whether the person shall act or claim to act 38.29 as principal or agent, or under or without the authority of this 38.30 chapter. For that purpose the commissioner and a duly 38.31 designated representative shall have free access to the offices 38.32 and places of business, books, accounts, papers, records, files, 38.33 safes, and vaults of all such persons. The commissioner and all 38.34 persons duly designated shall have authority to require the 38.35 attendance of and to examine, under oath, all persons whomsoever 38.36 whose testimony the commissioner may require relative to the 39.1 loan or the business or to the subject matter of any 39.2 examination, investigation, or hearing. Upon written agreement 39.3 with the licensee, the commissioner may conduct examinations 39.4 applying the procedures for purposes of this subdivision and 39.5 section 46.04, subdivision 1, to facilitate the qualifications 39.6 of the licensee to participate in the United States Small 39.7 Business Administration loan guarantee or similar programs. 39.8 Each licensee shall pay to the commissioner such amount as 39.9 may be required under section 46.131, and the commissioner may 39.10 maintain an action for the recovery of such costs in any court 39.11 of competent jurisdiction. 39.12 Sec. 46. Minnesota Statutes 1996, section 56.131, 39.13 subdivision 1, is amended to read: 39.14 Subdivision 1. [INTEREST RATES AND CHARGES.] (a) On any 39.15 loan in a principal amount not exceeding $56,000$100,000 or 15 39.16 percent of a Minnesota corporate licensee's capital stock and 39.17 surplus as defined in section 53.015, if greater, a licensee may 39.18 contract for and receive interest, finance charges, and other 39.19 charges as provided in section 47.59. 39.20 (b) Loans may be interest-bearing or precomputed. 39.21 (c) Notwithstanding section 47.59 to the contrary, to 39.22 compute time on interest-bearing and precomputed loans, 39.23 including, but not limited to the calculation of interest, a day 39.24 is considered 1/30 of a month when calculation is made for a 39.25 fraction of a calendar month. A year is 12 calendar months. A 39.26 calendar month is that period from a given date in one month to 39.27 the same numbered date in the following month, and if there is 39.28 no same numbered date, to the last day of the following month. 39.29 When a period of time includes a whole month and a fraction of a 39.30 month, the fraction of a month is considered to follow the whole 39.31 month. 39.32 In the alternative, for interest-bearing loans, a licensee 39.33 may charge interest at the rate of 1/365 of the agreed annual 39.34 rate for each actual day elapsed. 39.35 (d) With respect to interest-bearing loans and 39.36 notwithstanding section 47.59: 40.1 (1) Interest must be computed on unpaid principal balances 40.2 outstanding from time to time, for the time outstanding. Each 40.3 payment must be applied first to the accumulated interest and 40.4 the remainder of the payment applied to the unpaid principal 40.5 balance; provided however, that if the amount of the payment is 40.6 insufficient to pay the accumulated interest, the unpaid 40.7 interest continues to accumulate to be paid from the proceeds of 40.8 subsequent payments and is not added to the principal balance. 40.9 (2) Interest must not be payable in advance or compounded. 40.10 However, if part or all of the consideration for a new loan 40.11 contract is the unpaid principal balance of a prior loan, then 40.12 the principal amount payable under the new loan contract may 40.13 include any unpaid interest which has accrued. The unpaid 40.14 principal balance of a precomputed loan is the balance due after 40.15 refund or credit of unearned interest as provided in paragraph 40.16 (e), clause (3). The resulting loan contract is deemed a new 40.17 and separate loan transaction for all purposes. 40.18 (e) With respect to precomputed loans and notwithstanding 40.19 section 47.59 to the contrary: 40.20 (1) Loans must be repayable in substantially equal and 40.21 consecutive monthly installments of principal and interest 40.22 combined, except that the first installment period may be more 40.23 or less than one month by not more than 15 days, and the first 40.24 installment payment amount may be larger than the remaining 40.25 payments by the amount of interest charged for the extra days 40.26 and must be reduced by the amount of interest for the number of 40.27 days less than one month to the first installment payment; and 40.28 monthly installment payment dates may be omitted to accommodate 40.29 borrowers with seasonal income. 40.30 (2) Payments may be applied to the combined total of 40.31 principal and precomputed interest until the loan is fully 40.32 paid. Payments must be applied in the order in which they 40.33 become due. 40.34 (3) If the maturity of the loan is accelerated for any 40.35 reason and judgment is entered, the licensee shall credit the 40.36 borrower with the same refund as if prepayment in full had been 41.1 made on the date the judgment is entered. 41.2 (4) If two or more installments are delinquent one full41.3 month or more on any due date, and if the contract so provides,41.4 the licensee may reduce the unpaid balance by the refund credit41.5 which would be required for prepayment in full on the due date41.6 of the most recent maturing installment in default. Thereafter,41.7 and in lieu of any other default or deferment charges, the41.8 single annual percentage rate permitted by this subdivision may41.9 be charged on the unpaid balance until fully paid.41.10 (5)Following the final installment as originally scheduled 41.11 or deferred, the licensee, for any loan contract which has not 41.12 previously been converted to interest-bearing under 41.13 clause (4)(7), may charge interest on any balance remaining 41.14 unpaid, including unpaid default or deferment charges, at the 41.15 single annual percentage rate permitted by this subdivision 41.16 until fully paid. 41.17 (6)(5) With respect to a loan secured by an interest in 41.18 real estate, and having a maturity of more than 60 months, the 41.19 original schedule of installment payments must fully amortize 41.20 the principal and interest on the loan. The original schedule 41.21 of installment payments for any other loan secured by an 41.22 interest in real estate must provide for payment amounts that 41.23 are sufficient to pay all interest scheduled to be due on the 41.24 loan. 41.25 (6) A delinquency charge as provided for in section 47.59, 41.26 subdivision 6, paragraph (a), clause (4). 41.27 (7) Grant extensions, deferments, or conversions to 41.28 interest-bearing as provided in section 47.59, subdivision 5. 41.29 Sec. 47. Minnesota Statutes 1996, section 56.131, 41.30 subdivision 4, is amended to read: 41.31 Subd. 4. [ADJUSTMENT OF DOLLAR AMOUNTS.] The dollar 41.32 amounts in this sectionsubdivision 2, sections 53.04, 41.33 subdivision 3a, paragraph (c), 56.01, 56.12, and 56.125 shall 41.34 change periodically, as provided in section 47.59, subdivision 3. 41.35 Sec. 48. Minnesota Statutes 1996, section 59A.08, 41.36 subdivision 3, is amended to read: 42.1 Subd. 3. The information required by subdivision 1 shall42.2 only be required in the initial insurance premium finance42.3 agreement entered into if said agreement is open end. An42.4 insurance premium finance agreement is open end if it provides42.5 that additional or subsequent insurance premiums may be financed42.6 and added to the initial insurance premium finance agreement42.7 from time to time.42.8 Additional or subsequent premiums may be added to an open42.9 endinsurance premium finance agreement from time to time, 42.10 provided that: 42.11 (a) The additional or subsequent insurance premium to be 42.12 added results from additional premiums required under policies 42.13 presently being financed under the open endinsurance premium 42.14 finance agreement or from a renewal of a policy or from other 42.15 policies owned or purchased by the insured. 42.16 (b) The insurance premium finance company receives written 42.17 notice or advice from an insurer authorized to do business in 42.18 this state or from an insurance agent licensed in this state 42.19 acknowledging that the premium on an existing financed policy 42.20 has been increased or that a policy has been renewed or that 42.21 additional policies have or will be issued to the insured. The 42.22 notice or advice shall contain the amount of the additional 42.23 premium, the down payment collected by the insurer or agent, if 42.24 any, and the amount of premium to be added to the open end42.25 insurance premium finance agreement. 42.26 (c) If the additional premiums to be added to the open end42.27 insurance premium finance agreement result from additional 42.28 premiums required on policies presently financed under the 42.29 agreement which are to be financed beyond the scheduled maturity42.30 of the original financing, the renewal of a policy or from an42.31 additional policy owned or purchased by the insured, the42.32 insurance premium finance company shall mail a notice to the42.33 insured at the address shown in the policy. Said notice shall42.34 contain:42.35 (1) The information required by subdivision 1,42.36 notwithstanding that the notice is not signed by, nor on behalf43.1 of the insured;43.2 (2) A conspicuous statement to the insured stating that the43.3 insured may tender the premiums in full or disaffirm the43.4 financing of the premium on the renewal or additional policies43.5 by mailing to the insurance premium finance company notice of43.6 intention to do so within ten days after the insurance premium43.7 finance company mails to the insured the notice required by this43.8 subdivision;43.9 (3) A conspicuous statement to the insured that the43.10 insurance premium finance company may, in event of default in43.11 payment of the additional premium, or any installment thereof,43.12 cause the insured's insurance contract or contracts to be43.13 canceled as provided in section 59A.11.43.14 (d) At the time the notice of additional premium to be43.15 added to the open end insurance premium finance agreement is43.16 mailed to the insured as provided in clause (c), an employee of43.17 the insurance premium finance company shall prepare and sign a43.18 certificate or affidavit of mailing setting forth the following:43.19 (1) The name of the employee who mailed the notice of the43.20 additional premium to be financed.43.21 (2) That the employee mailing the notice is over 18 years43.22 of age.43.23 (3) The date and place of the deposit of the notice in the43.24 mail.43.25 (4) The name and address of the person to whom the notice43.26 was mailed as shown on the envelope containing the notice.43.27 (5) That the envelope containing the notice was sealed and43.28 deposited in the mail with the proper postage thereon.43.29 A certificate or affidavit of mailing, prepared and signed43.30 as prescribed in this subdivision shall raise rebuttable43.31 presumption that the notice was mailed to the insured at the43.32 address shown in the certificate or affidavit of mailing.43.33 (e) The insurance premium finance company may make a43.34 finance charge in accordance with section 59A.09 for additional43.35 premiums financed and added to an open end insurance premium43.36 finance agreement; however, only one flat rate service fee may44.1 be made or charged for each insurance premium finance agreement44.2 entered into and no additional flat service fee may be made or44.3 charged for adding additional or subsequent premiums to an open44.4 end insurance premium finance agreement for which a flat service44.5 fee was previously made or charged.or from a renewal of a 44.6 policy or from other policies owned or purchased by the insured, 44.7 a written notice must be mailed, faxed, or delivered to the 44.8 insured outlining any changes to the information required by 44.9 subdivision 1 along with a conspicuous statement to the insured 44.10 that the insured may tender the premiums in full or affirm the 44.11 proposed changes by tendering either an additional down payment 44.12 or tendering the proposed revised installment amount, or 44.13 disaffirm the financing of the additional premium by continuing 44.14 the original payment amount as agreed to in the initial 44.15 agreement. 44.16 If the proposed revisions in paragraph (c) are affirmed by 44.17 the insured, the finance company may make an additional finance 44.18 charge according to section 59A.09 for the additional premium 44.19 financed and added to the open-end agreement; however, no 44.20 additional flat service fee may be made or charged for adding 44.21 additional or subsequent premiums to an open-end insurance 44.22 premium finance agreement for which a flat service fee was 44.23 previously made or charged. 44.24 Sec. 49. Minnesota Statutes 1996, section 59A.08, is 44.25 amended by adding a subdivision to read: 44.26 Subd. 5. [COMPETITIVE EQUALITY.] No insurance agent, 44.27 insurance broker, or insurer may require a person to use a 44.28 particular insurance premium finance company or other 44.29 installment payment plan for which a finance charge or other fee 44.30 in connection with an installment payment has been or will be 44.31 imposed. 44.32 Sec. 50. Minnesota Statutes 1996, section 59A.11, 44.33 subdivision 2, is amended to read: 44.34 Subd. 2. Not less than ten days' written notice shall be 44.35 mailed to the insured setting forth the intent of the insurance 44.36 premium finance company to cancel the insurance contract unless 45.1 the default is cured prior to the date stated in the notice. 45.2 The insurance agent or insurance broker indicated on the premium 45.3 finance agreement shall also be mailedgiven ten days' notice of 45.4 this action in a manner agreed upon between the insurance 45.5 premium finance company and insurance agent or insurance broker. 45.6 Sec. 51. Minnesota Statutes 1996, section 59A.11, 45.7 subdivision 3, is amended to read: 45.8 Subd. 3. (a) Pursuant to the power of attorney or other 45.9 authority referred to above, the insurance premium finance 45.10 company may cancel on behalf of the insured by mailing to the 45.11 insurer written notice stating when thereafter the cancellation 45.12 shall be effective, and the insurance contract shall be canceled 45.13 as if such notice of cancellation had been submitted by the 45.14 insured personally, but without requiring the return of the 45.15 insurance contract. In the event that the insurer or its agent 45.16 does not provide the insurance premium finance company with a 45.17 specific mailing address for the purposes of receipt of the 45.18 above notice, then mailing by the insurance premium finance 45.19 company to the insurer at the address which is on file and of 45.20 record with the commissioner of commerce pursuant to the 45.21 provisions of chapters 60A and 72A shall be considered 45.22 sufficient notice under this section. The notice requirements 45.23 of this paragraph only apply if an insurance premium finance 45.24 company and an insurer have not agreed on a method of providing 45.25 notice of cancellation. 45.26 (b) The insurance premium finance company shall also mail a 45.27 notice of cancellation to the insured at the insured's last 45.28 known address and. 45.29 (c) Written notice of the cancellation must also be given 45.30 to the insurance agent or insurance broker indicated on the 45.31 premium finance agreement. Written notice to the insurance 45.32 agent or broker required by this paragraph may be given in a 45.33 manner agreed upon between the insurance premium finance 45.34 company, insurer, agent, or broker. 45.35 Sec. 52. Minnesota Statutes 1996, section 62B.04, 45.36 subdivision 1, is amended to read: 46.1 Subdivision 1. [CREDIT LIFE INSURANCE.] (1) The initial 46.2 amount of credit life insurance shall not exceed the amount of 46.3 principal repayable under the contract of indebtedness plus an 46.4 amount equal to one monthly payment. Thereafter, if the 46.5 indebtedness is repayable in substantially equal installments 46.6 according to a predetermined schedule, the amount of insurance 46.7 on which the premium is calculatedshall be equal tonot exceed 46.8 the scheduled indebtedness plus one monthly payment or actual 46.9 amount of indebtedness, whichever is greater. If the contract 46.10 of indebtedness provides for a variable rate of finance charge 46.11 or interest, the initial rate or the scheduled rates based on 46.12 the initial index must be used in determining the scheduled 46.13 amount of indebtedness and subsequent changes to the rate must 46.14 be disregarded in determining whether the contract is repayable 46.15 in substantially equal installments according to a predetermined 46.16 schedule. 46.17 (2) Notwithstanding clause (1), the amount of credit life 46.18 insurance written in connection with credit transactions 46.19 repayable over a specified term exceeding 63 months shall not 46.20 exceed the greater of: (i) the actual amount of unpaid 46.21 indebtedness as it exists from time to time; or (ii) where an 46.22 indebtedness is repayable in substantially equal installments 46.23 according to a predetermined schedule, the scheduled amount of 46.24 unpaid indebtedness, less any unearned interest or finance 46.25 charges, plus an amount equal to two monthly payments. If the 46.26 credit transaction provides for a variable rate of finance 46.27 charge or interest, the initial rate or the scheduled rates 46.28 based on the initial index must be used in determining the 46.29 scheduled amount of unpaid indebtedness and subsequent changes 46.30 in the rate must be disregarded in determining whether the 46.31 contract is repayable in substantially equal installments 46.32 according to a predetermined schedule. 46.33 (3) Notwithstanding clauses (1) and (2), insurance on 46.34 educational, agricultural, and horticultural credit transaction 46.35 commitments may be written on a nondecreasing or level term plan 46.36 for the amount of the loan commitment. 47.1 (4) If the contract of indebtedness provides for a variable 47.2 rate of finance charge or interest, the initial rate or the 47.3 scheduled rates based on the initial index shall be used in 47.4 determining the scheduled amount of indebtedness, and subsequent 47.5 changes to the rate shall be disregarded in determining whether 47.6 the contract is repayable in substantially equal installments 47.7 according to a predetermined schedule. 47.8 Sec. 53. Minnesota Statutes 1996, section 300.20, 47.9 subdivision 2, is amended to read: 47.10 Subd. 2. [VACANCIES.] If the certificate of incorporation 47.11 or the bylaws so provides, a vacancy in the board of directors 47.12 may be filled by the remaining directors. Not more than 47.13 one-third of the members of the board may be so filled in any 47.14 one year except any number may be appointed to provide for at 47.15 least threefive directors until any subsequent meeting of the 47.16 stockholders. 47.17 Sec. 54. Minnesota Statutes 1996, section 303.25, 47.18 subdivision 5, is amended to read: 47.19 Subd. 5. [SOLICITATION OF BUSINESS.] A foreign trust 47.20 association may not maintain an office within this state, but it 47.21 may solicit business within this state if banking or trust 47.22 associations or corporations organized under the laws of this 47.23 state or national banking associations maintaining their 47.24 principal offices in this state may solicit business in the 47.25 state in which the foreign trust association maintains its 47.26 principal office. For purposes of this subdivision, 47.27 solicitation of business includes the activities authorized for 47.28 state or national banking associations exercising fiduciary 47.29 powers maintaining their principal offices in this state 47.30 considered a representative trust office established under 47.31 section 48.476. 47.32 Sec. 55. Minnesota Statutes 1996, section 332.21, is 47.33 amended to read: 47.34 332.21 [CONTRACTS.] 47.35 (a) Each contract entered into by the licensee and the 47.36 debtor shall be in writing and signed by both parties. The 48.1 licensee shall furnish the debtor with a copy of the signed 48.2 contract. Each such contract shall set forth: 48.3 (1) the dollar charges agreed upon for the services of the 48.4 licensee, clearly disclosing to such debtor the total amount 48.5 which may be retained by licensee for services if the contract 48.6 is fully performed, which maximum amount would be the 48.7 origination fee together with 15 percent of the amount scheduled 48.8 to be liquidated by such contract ,. This disclosure must state 48.9 that if the amount of debt owed is increased by interest, late 48.10 fees, over the limit fees, and other amounts imposed by the 48.11 creditor or by reason of the events under paragraph (c), the 48.12 length of the contract would be extended and remain in force and 48.13 that the total dollar charges agreed upon may increase at the 48.14 rate agreed upon in the original contract; 48.15 (2) the terms upon which the debtor may cancel the contract 48.16 as set out in section 332.23 ,; 48.17 (3) all debts which are to be managed by the licensee, 48.18 including the name of the creditor and the amount of the debt ,; 48.19 and 48.20 (4) such other matter as the commissioner may require by 48.21 rule. 48.22 (b) A contract shall not be effective until a payment has 48.23 been made to the licensee for distribution to creditors or until 48.24 three business days after the signing thereof, whichever is 48.25 later. Within such period an individual may disaffirm said 48.26 contract and upon such disaffirmance said contract shall be null 48.27 and void. 48.28 (c) Total fees contained in the contract may be exceeded in 48.29 relation to creditors under open-end agreements if it is agreed 48.30 to in the contract and the additional debts so contracted to be 48.31 prorated do not exceed ten percent of the original debts in the 48.32 contract or written revisions to the original contract. 48.33 Sec. 56. Minnesota Statutes 1996, section 332.23, 48.34 subdivision 2, is amended to read: 48.35 Subd. 2. [WITHDRAWAL OF FEE.] The licensee may withdraw 48.36 and retain as partial payment of the licensee's total fee not 49.1 more than 15 percent of any sum deposited with the licensee by 49.2 the debtor for distribution. The remaining 85 percent must be 49.3 disbursed to listed creditors pursuant to and in accordance with 49.4 the contract between the debtor and the licensee within 35 days 49.5 after receipt unless the reasonable payment of one or more of 49.6 the debtor's obligations requires that the funds be held for a 49.7 longer period so as to accumulate a sum certain or where the 49.8 debtor's payment is returned for nonsufficient funds, then no 49.9 longer than 42 days. Total payment to licensee for services 49.10 rendered, excluding the origination fee and any credit 49.11 background report, shall not exceed 15 percent of funds 49.12 deposited with licensee by debtor for distribution. 49.13 Sec. 57. Minnesota Statutes 1996, section 332.23, 49.14 subdivision 5, is amended to read: 49.15 Subd. 5. [ADVANCE PAYMENTS.] Notwithstanding anything 49.16 herein to the contrary no fees or charges shall be received or 49.17 retained for any payments by the debtor made more than the 49.18 following number of days in advance of the date specified in the 49.19 contract on which they are due: (a) 3042 days in the case of 49.20 contracts requiring monthly payments; (b) 15 days in the case of 49.21 contracts requiring biweekly payments; or (c) seven days in the 49.22 case of contracts requiring weekly payments. For those 49.23 contracts which do not require payments in specified amounts, a 49.24 payment shall be deemed an advance payment to the extent it 49.25 exceeds twice the average regular payment theretofore made by 49.26 the debtor pursuant to that contract. This subdivision shall 49.27 not apply when it is the intention of the debtor to use such 49.28 advance payments to satisfy future payment of obligations due 49.29 within 30 days under the contract. 49.30 Sec. 58. [REPEALER.] 49.31 Minnesota Statutes 1996, sections 13.99, subdivision 13; 49.32 47.29; 47.31; 47.32; 48.185, subdivision 5; 49.47; 49.48; 50.03; 49.33 50.23; and 59A.14, are repealed. 49.34 Sec. 59. [EFFECTIVE DATE; APPLICABILITY.] 49.35 Sections 1, 4 to 6, 8 to 11, 15 to 18, 21, 22, 26 to 52, 49.36 and 54 to 58 are effective the day following final enactment. 50.1 Sections 13, 14, 19, and 20 are effective July 1, 1997, and 50.2 apply to existing credit card agreements issued under Minnesota 50.3 Statutes, section 48.185, if the requirements of section 47.59, 50.4 subdivision 15, paragraph (e), are met.