HF 753

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 share 
  3.23  insurance corporation approved under section 52.24 other 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 company regulated 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 main banking house premises" 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  house premises which is not an "extension of the main banking 
  6.25  house premises" 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 its 
  7.21  function is limited as provided in section 47.53 and its 
  7.22  location conforms with the provisions of section 47.52.  A bank 
  7.23  having such a retained detached facility shall be limited to 
  7.24  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 excluding 
  8.9   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 finance 
  8.22  charge on the unpaid balance of the principal amount at an 
  8.23  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 by 
 12.11  the consumer except 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; or 
 18.4      (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.10 501B.151, subdivision 6 11, 
 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 banking activity 
 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 in 
 20.16  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 of 
 21.17  the place where 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 of 
 27.10  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 operate 
 28.7   detached facilities in another state on the same terms and 
 28.8   conditions and subject to the same limitations and restrictions 
 28.9   as are applicable to the establishment of branches by national 
 28.10  banks located in Minnesota, except that approval of the 
 28.11  comptroller of the currency shall not be required for such 
 28.12  detached facilities has 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 STATE INTERSTATE 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 reciprocating 
 28.20  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 reciprocating 
 28.24  state or, subject to applicable federal law, any other state and 
 28.25  a savings bank holding company with principal offices in a 
 28.26  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 those contained in sections 48.90 to 
 28.32  48.995 48.99 apply to reciprocal interstate branching and 
 28.33  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 the 
 29.11  acquisition of control of financial institutions chartered in 
 29.12  that state and financial institution holding companies with 
 29.13  principal offices in that state by a savings bank chartered in 
 29.14  this state or savings bank holding company with principal 
 29.15  offices in this state under conditions substantially similar to 
 29.16  those imposed by the laws of Minnesota, as determined by the 
 29.17  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 the 
 29.21  commissioner of commerce to approve a transaction under this 
 29.22  section is in addition to that provided for in section 49.48. 
 29.23     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.385 51A.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 6 to 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 either subdivision 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 regular 
 37.33  business hours each weekday, except for legal holidays and for 
 37.34  any weekday the commissioner grants approval to the licensee to 
 37.35  remain closed.  A licensed place of business may be open on 
 37.36  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 full 
 41.3   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 credit 
 41.5   which would be required for prepayment in full on the due date 
 41.6   of the most recent maturing installment in default.  Thereafter, 
 41.7   and in lieu of any other default or deferment charges, the 
 41.8   single annual percentage rate permitted by this subdivision may 
 41.9   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 section subdivision 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 shall 
 42.2   only be required in the initial insurance premium finance 
 42.3   agreement entered into if said agreement is open end.  An 
 42.4   insurance premium finance agreement is open end if it provides 
 42.5   that additional or subsequent insurance premiums may be financed 
 42.6   and added to the initial insurance premium finance agreement 
 42.7   from time to time.  
 42.8      Additional or subsequent premiums may be added to an open 
 42.9   end insurance 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 end insurance 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 end 
 42.25  insurance premium finance agreement.  
 42.26     (c) If the additional premiums to be added to the open end 
 42.27  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 maturity 
 42.30  of the original financing, the renewal of a policy or from an 
 42.31  additional policy owned or purchased by the insured, the 
 42.32  insurance premium finance company shall mail a notice to the 
 42.33  insured at the address shown in the policy.  Said notice shall 
 42.34  contain: 
 42.35     (1) The information required by subdivision 1, 
 42.36  notwithstanding that the notice is not signed by, nor on behalf 
 43.1   of the insured; 
 43.2      (2) A conspicuous statement to the insured stating that the 
 43.3   insured may tender the premiums in full or disaffirm the 
 43.4   financing of the premium on the renewal or additional policies 
 43.5   by mailing to the insurance premium finance company notice of 
 43.6   intention to do so within ten days after the insurance premium 
 43.7   finance company mails to the insured the notice required by this 
 43.8   subdivision; 
 43.9      (3) A conspicuous statement to the insured that the 
 43.10  insurance premium finance company may, in event of default in 
 43.11  payment of the additional premium, or any installment thereof, 
 43.12  cause the insured's insurance contract or contracts to be 
 43.13  canceled as provided in section 59A.11.  
 43.14     (d) At the time the notice of additional premium to be 
 43.15  added to the open end insurance premium finance agreement is 
 43.16  mailed to the insured as provided in clause (c), an employee of 
 43.17  the insurance premium finance company shall prepare and sign a 
 43.18  certificate or affidavit of mailing setting forth the following: 
 43.19     (1) The name of the employee who mailed the notice of the 
 43.20  additional premium to be financed.  
 43.21     (2) That the employee mailing the notice is over 18 years 
 43.22  of age.  
 43.23     (3) The date and place of the deposit of the notice in the 
 43.24  mail.  
 43.25     (4) The name and address of the person to whom the notice 
 43.26  was mailed as shown on the envelope containing the notice.  
 43.27     (5) That the envelope containing the notice was sealed and 
 43.28  deposited in the mail with the proper postage thereon.  
 43.29     A certificate or affidavit of mailing, prepared and signed 
 43.30  as prescribed in this subdivision shall raise rebuttable 
 43.31  presumption that the notice was mailed to the insured at the 
 43.32  address shown in the certificate or affidavit of mailing.  
 43.33     (e) The insurance premium finance company may make a 
 43.34  finance charge in accordance with section 59A.09 for additional 
 43.35  premiums financed and added to an open end insurance premium 
 43.36  finance agreement; however, only one flat rate service fee may 
 44.1   be made or charged for each insurance premium finance agreement 
 44.2   entered into and no additional flat service fee may be made or 
 44.3   charged for adding additional or subsequent premiums to an open 
 44.4   end insurance premium finance agreement for which a flat service 
 44.5   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 mailed given 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 calculated shall be equal to not 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 three five 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) 30 42 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.