Minnesota Office of the Revisor of Statutes
[*Add Subtitle/link: Office]

Menu

Revisor of Statutes Menu

Minnesota Session Laws

Key: (1) language to be deleted (2) new language

                            CHAPTER 157-H.F.No. 753 
                  An act relating to financial institutions; authorizing 
                  facsimile or electronic filings and certifications; 
                  regulating the powers and structure of certain 
                  institutions; regulating consumer credit; modifying 
                  lending authority; regulating fees and charges; making 
                  technical and conforming changes; amending Minnesota 
                  Statutes 1996, sections 46.04, by adding a 
                  subdivision; 46.044, by adding a subdivision; 46.046, 
                  by adding a subdivision; 46.047, subdivision 2; 46.07, 
                  subdivision 2; 46.131, subdivision 2; 47.20, 
                  subdivisions 9 and 14; 47.206, subdivision 6; 47.55, 
                  subdivision 1; 47.56; 47.59, subdivisions 1, 4, 5, 6, 
                  and 12; 47.61, subdivision 3; 47.64, by adding a 
                  subdivision; 47.75, subdivision 1; 48.01, subdivision 
                  2; 48.09, by adding a subdivision; 48.15, subdivisions 
                  2 and 4; 48.24, subdivision 2, and by adding a 
                  subdivision; 48.512, by adding a subdivision; 48.61, 
                  subdivision 7, and by adding a subdivision; 49.215, 
                  subdivision 3; 49.33; 49.36, subdivision 4; 49.42; 
                  50.245; 51A.38, subdivision 1; 52.04, subdivision 2a, 
                  and by adding a subdivision; 52.062, subdivision 1, 
                  and by adding a subdivision; 52.063; 52.064, by adding 
                  a subdivision; 52.13; 52.201; 53.04, by adding a 
                  subdivision; 53.05; 53.09, subdivision 2a; 55.06, 
                  subdivision 1; 56.07; 56.10, subdivision 1; 56.131, 
                  subdivisions 1 and 4; 59A.08, subdivision 3, and by 
                  adding a subdivision; 59A.11, subdivisions 2 and 3; 
                  62B.04, subdivision 1; 300.20, subdivision 2; 303.02, 
                  subdivision 4; 303.25, subdivision 5; 325F.68, 
                  subdivision 2; 332.21; 332.23, subdivisions 1, 2, and 
                  5; and 332.50, subdivisions 1 and 2; Laws 1996, 
                  chapter 414, article 1, section 45; proposing coding 
                  for new law in Minnesota Statutes, chapter 48; 
                  repealing Minnesota Statutes 1996, sections 13.99, 
                  subdivision 13; 47.29; 47.31; 47.32; 49.47; 49.48; 
                  50.03; 50.23; and 59A.14. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1996, section 46.04, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [APPLICATIONS, FACSIMILE OR ELECTRONIC MEDIA.] (a)
        The commissioner when providing forms and procedural guidance to 
        persons governed by or seeking approval to operate under the 
        chapters referred to in this section may prescribe alternatives 
        to paper forms and delivery in person or by mail.  In 
        considering accepting filings by facsimile or electronic media, 
        the commissioner may accept fees and reimbursement for costs 
        associated with the applications and notices by wire transfer 
        and debit card. 
           (b) Certifications required to authenticate, officiate, or 
        establish standing of the application or notice as a matter of 
        law, rule, or sound business practice may be authenticated in an 
        alternative to paper-based original signatures or notarial seals 
        on facsimile or electronic media submissions in a technically 
        competent means at the discretion of the commissioner, including 
        but not limited to, document imaging meeting the standard in 
        subdivision 3, bar coding, personal identification numbers, or 
        other reliable communicated verification technique. 
           Sec. 2.  Minnesota Statutes 1996, section 46.044, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [SPECIAL PURPOSE BANKS, EXCEPTIONS.] For purposes 
        of applications to organize and operate special purpose banks as 
        defined in section 46.046, subdivision 5, the conditions in 
        subdivision 1, clauses (2) and (4), do not apply. 
           Sec. 3.  Minnesota Statutes 1996, section 46.046, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [SPECIAL PURPOSE BANK.] Special purpose bank 
        means a bank as defined in subdivision 2 that: 
           (1) engages only in credit card operations as authorized in 
        section 47.59; 
           (2) does not accept demand deposits or deposits that the 
        depositor may withdraw by check or similar means for payment to 
        third parties or others; 
           (3) does not accept savings or time deposits of less than 
        $100,000; 
           (4) maintains only one office that accepts deposits; and 
           (5) does not engage in the business of making commercial 
        loans. 
           Sec. 4.  Minnesota Statutes 1996, section 46.047, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BANKING INSTITUTION.] The term "banking 
        institution" means a bank, trust company, bank and trust 
        company, savings bank, or industrial loan and thrift institution 
        operating under section 53.04, subdivision 5, that is organized 
        under the laws of this state, or a holding company which owns or 
        otherwise controls the banking institution. 
           Sec. 5.  Minnesota Statutes 1996, section 46.07, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONFIDENTIAL RECORDS.] The commissioner shall 
        divulge facts and information obtained in the course of 
        examining financial institutions under the commissioner's 
        supervision only when and to the extent required or permitted by 
        law to report upon or take special action regarding the affairs 
        of an institution, or ordered by a court of law to testify or 
        produce evidence in a civil or criminal proceeding, except that 
        the commissioner may furnish information as to matters of mutual 
        interest to an official or examiner of the federal reserve 
        system, the Federal Deposit Insurance Corporation, the Federal 
        Office of Thrift Supervision, the Federal Home Loan Bank System, 
        the National Credit Union Administration, comptroller of the 
        currency, a legally constituted state credit union share 
        insurance corporation approved under section 52.24 other state 
        bank supervisory agencies subject to cooperative agreements 
        authorized by section 49.411, subdivision 7, the United States 
        Small Business Administration, for purposes of sections 53.09, 
        subdivision 2a, and 56.10, subdivision 1, or state and federal 
        law enforcement agencies.  The commissioner shall not be 
        required to disclose the name of a debtor of a financial 
        institution under the commissioner's supervision, or anything 
        relative to the private accounts, ownership, or transactions of 
        an institution, or any fact obtained in the course of an 
        examination thereof, except as herein provided.  For purposes of 
        this subdivision, a subpoena is not an order of a court of law.  
        These records are classified confidential or protected nonpublic 
        for purposes of the Minnesota government data practices act and 
        their destruction, as prescribed in section 46.21, is exempt 
        from the provisions of chapter 138 and Laws 1971, chapter 529, 
        so far as their deposit with the state archives.  
           Sec. 6.  Minnesota Statutes 1996, section 46.131, 
        subdivision 2, is amended to read: 
           Subd. 2.  Each bank, trust company, savings bank, savings 
        association, small loan company regulated lender, industrial 
        loan and thrift company, credit union, motor vehicle sales 
        finance company, debt prorating agency and insurance premium 
        finance company organized under the laws of this state or 
        required to be administered by the commissioner of commerce 
        shall pay into the state treasury its proportionate share of the 
        cost of maintaining the department of commerce. 
           Sec. 7.  Minnesota Statutes 1996, section 47.20, 
        subdivision 9, is amended to read: 
           Subd. 9.  For purposes of this subdivision the term 
        "mortgagee" shall mean all state banks and trust companies, 
        national banking associations, state and federally chartered 
        savings associations, mortgage banks, savings banks, insurance 
        companies, credit unions or assignees of the above. 
           (a) Each mortgagee requiring funds of a mortgagor to be 
        paid into an escrow, agency or similar account for the payment 
        of taxes or homeowner's insurance premiums with respect to a 
        mortgaged one-to-four family, owner occupied residence located 
        in this state, unless the account is required by federal law or 
        regulation or maintained in connection with a conventional loan 
        in an original principal amount in excess of 80 percent of the 
        lender's appraised value of the residential unit at the time the 
        loan is made or maintained in connection with loans insured or 
        guaranteed by the secretary of housing and urban development, by 
        the administrator of veterans affairs, or by the administrator 
        of the farmers home administration or any successor, shall 
        calculate interest on such funds at a rate of not less than 
        three percent per annum.  Such interest shall be computed on the 
        average monthly balance in such account on the first of each 
        month for the immediately preceding 12 months of the calendar 
        year or such other fiscal year as may be uniformly adopted by 
        the mortgagee for such purposes and shall be annually credited 
        to the remaining principal balance on the mortgage, or at the 
        election of the mortgagee, paid to the mortgagor or credited to 
        the mortgagor's account.  If the interest exceeds the remaining 
        balance, the excess shall be paid to the mortgagor or vendee.  
        The requirement to pay interest shall apply to such accounts 
        created in conjunction with mortgage loans made prior to July 1, 
        1996. 
           (b) Unless the account is exempt from the requirements of 
        paragraph (a), a mortgagee shall allow a mortgagor to elect to 
        discontinue the escrow account escrowing for taxes and 
        homeowner's insurance after the seventh anniversary of the date 
        of the mortgage, unless the mortgagor has been more than 30 days 
        delinquent in the previous 12 months.  This paragraph shall 
        apply to accounts created prior to July 1, 1996, as well as to 
        accounts created on or after July 1, 1996.  The mortgagor's 
        election shall be in writing.  The lender or mortgage broker 
        shall, with respect to mortgages made on or after August 1, 
        1997, notify an applicant for a mortgage of the applicant's 
        rights under this paragraph.  This notice shall be given at or 
        prior to the closing of the mortgage loan and shall read 
        substantially as follows: 
                    "NOTICE OF RIGHT TO DISCONTINUE ESCROW
           If your mortgage loan involves an escrow account for taxes 
        and homeowner's insurance, you may have the right in five years 
        to discontinue the account and pay your own taxes and homeowners 
        insurance.  If you are eligible to discontinue the escrow 
        account, you will be notified in five years." 
           If the escrow account has a negative balance or a shortage 
        at the time the mortgagor requests discontinuance, the mortgagee 
        is not obligated to allow discontinuance until the escrow 
        account is balanced or the shortage has been repaid. 
           (c) The mortgagee shall notify the mortgagor within 60 days 
        after the seventh anniversary of the date of the mortgage if the 
        right to discontinue the escrow account is in accordance with 
        paragraph (b).  For mortgage loans entered into, on or prior to 
        July 1, 1989, the notice required by this paragraph shall be 
        provided to the mortgagor by January 1, 1997. 
           (d) Effective January 1, 1998, the requirements of 
        paragraph (b), regarding the mortgagor's election to discontinue 
        the escrow account, and paragraph (c), regarding notification to 
        mortgagor, shall apply when the fifth anniversary of the date of 
        the mortgage has been reached. 
           (d) (e) A mortgagee may require the mortgagor to 
        reestablish the escrow account if the mortgagor has failed to 
        make timely payments for two consecutive payment periods at any 
        time during the remaining term of the mortgage, or if the 
        mortgagor has failed to pay taxes or insurance premiums when 
        due.  A payment received during a grace period shall be deemed 
        timely. 
           (e) (f) The mortgagee shall, subject to paragraph (b), 
        return any funds remaining in the account to the mortgagor 
        within 60 days after receipt of the mortgagor's written notice 
        of election to discontinue the escrow account. 
           (f) (g) The mortgagee shall not charge a direct fee for the 
        administration of the escrow account, nor shall the mortgagee 
        charge a fee or other consideration for allowing the mortgagor 
        to discontinue the escrow account. 
           Sec. 8.  Minnesota Statutes 1996, section 47.20, 
        subdivision 14, is amended to read: 
           Subd. 14.  (a) A lender requiring or offering private 
        mortgage insurance shall make available to the borrower or other 
        person paying the insurance premium the same premium payment 
        plans as are available to the lender in paying the private 
        mortgage insurance premium.  
           (b) Any refund or rebate for unearned private mortgage 
        insurance premiums shall be paid to the borrower or other person 
        actually providing the funds for payment of the premium.  
           (c) With regard to first mortgage loans made before, on, or 
        after January 1, 1997, the mortgagor shall have the right to 
        elect, in writing, to cancel borrower-purchased private mortgage 
        insurance if all of the following terms and conditions have been 
        met: 
           (1) if the current unpaid principal balance of a first 
        mortgage is 75 percent or less of the current fair market 
        appraised value of the property.  "Current fair market appraised 
        value" shall be based upon a current appraisal by a real estate 
        appraiser licensed or certified by the appropriate state or 
        federal agency and reasonably acceptable to the lender.  The 
        lender may require the mortgagor to pay for the appraisal; 
           (2) the mortgagor's monthly installments of principal, 
        interest, and escrow obligations have not been more than 30 days 
        past due over the 24-month period immediately preceding the 
        request for cancellation and all accrued late charges have been 
        paid; 
           (3) the mortgage was made at least 24 months prior to the 
        receipt of a request for cancellation of private mortgage 
        insurance; 
           (4) the property securing the mortgage is owner-occupied; 
        and 
           (5) the mortgage has not been pooled with other mortgages 
        in order to constitute, in whole or in part, collateral for 
        bonds issued by the state of Minnesota or any political 
        subdivision of the state of Minnesota or of any agency of any 
        political subdivision of the state of Minnesota. 
           (d) Other than the appraisal fee allowed pursuant to 
        paragraph (c), clause (1), the lender shall not charge the 
        borrower a fee or other consideration for cancellation of the 
        private mortgage insurance. 
           (e) With respect to all existing or future first mortgage 
        loans, a lender requiring private mortgage insurance shall, 
        after the payment of the 24th monthly premium installment of 
        private mortgage insurance, provide an annual written notice to 
        each mortgagor currently paying premiums for private mortgage 
        insurance.  The notice may be included in the annual statement 
        or may be included in other regular mailings to the mortgagor.  
        For mortgage loans made prior to January 1, 1996, the first 
        required annual notice must be provided no later than January 
        31, 1998.  The annual notice shall be on its own page, unless 
        included in a private mortgage insurance notice required under 
        the federal Real Estate Settlement Procedures Act, and shall 
        appear substantially as follows: 
             "NOTICE OF RIGHT TO CANCEL PRIVATE MORTGAGE INSURANCE 
           If you currently pay private mortgage insurance premiums, 
        you may have the right to cancel the insurance and cease paying 
        premiums.  This would permit you to make a lower total monthly 
        mortgage payment.  In most cases, you have the right to cancel 
        private mortgage insurance if the principal balance of your loan 
        is 80 percent or less of the current fair market appraised value 
        of your home.  If you wish to learn whether you are eligible to 
        cancel this insurance, please contact us at (address/phone)." 
           (f) If a mortgage loan governed by paragraph (c) is 
        serviced in accordance with the guidelines of either the Federal 
        National Mortgage Association or the Federal Home Loan Mortgage 
        Corporation, the lender shall cancel private mortgage insurance 
        in accordance with the cancellation guidelines of the applicable 
        entity in effect at the time the request for cancellation is 
        received. 
           Sec. 9.  Minnesota Statutes 1996, section 47.206, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PROHIBITED ACTS.] A person, including a lender, 
        may not advise, encourage, or induce a borrower or third party 
        to misrepresent information that is the subject of a loan 
        application or to violate the terms of the agreement.  Neither a 
        mortgage lender nor a mortgage broker shall advertise mortgage 
        terms, including interest rate and discount points, which were 
        not available from the lender or broker on the date or dates 
        specified in the advertisement.  For purposes of this section, 
        "advertisement" shall include a list or sampler of mortgage 
        terms compiled from information provided by the lender or 
        broker, with or without charge to the lender or broker, by a 
        newspaper, and shall also include advertising on the Internet. 
           Sec. 10.  Minnesota Statutes 1996, section 47.55, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [BANKING FACILITIES IN OPERATION PRIOR TO 
        MAY 1, 1971.] A bank may retain and operate one detached 
        facility as it may have had in operation prior to May 1, 1971 
        without requirement of approval hereunder, provided that its 
        function is limited as provided in section 47.53 and its 
        location conforms with the provisions of section 47.52.  A bank 
        having such a retained detached facility shall be limited to 
        operating five additional detached facilities. 
           Sec. 11.  Minnesota Statutes 1996, section 47.56, is 
        amended to read: 
           47.56 [TRANSFER OF LOCATION.] 
           The location of a detached facility transferred to another 
        location outside of a radius of three miles measured in a 
        straight line is subject to the same procedures and approval as 
        required hereunder for establishing a new detached facility, 
        except that.  The location of a detached facility transferred to 
        another location within the lesser of a radius of three miles 
        measured in a straight line from the existing location or the 
        municipality, as defined in section 47.51, in which it is 
        located is subject to the same procedures and approval as are 
        required in section 47.101, subdivision 2.  The relocation of a 
        detached facility within a municipality of 10,000 or less 
        population shall not require consent of other banks required in 
        section 47.52.  
           Sec. 12.  Minnesota Statutes 1996, section 47.59, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the following definitions shall apply. 
           (a) "Actuarial method" has the meaning given the term in 
        the Code of Federal Regulations, title 12, part 226, and 
        appendix J thereto. 
           (b) "Annual percentage rate" has the meaning given the term 
        in the Code of Federal Regulations, title 12, part 226, but 
        using the definition of "finance charge" used in this section. 
           (c) "Borrower" means a debtor under a loan or a purchaser 
        or debtor under a credit sale contract. 
           (d) "Business purpose" means a purpose other than a 
        personal, family, household, or agricultural purpose. 
           (e) "Cardholder" means a person to whom a credit card is 
        issued or who has agreed with the financial institution to pay 
        obligations arising from the issuance to or use of the card by 
        another person. 
           (f) "Consumer loan" means a loan made by a financial 
        institution in which: 
           (1) the debtor is a person other than an organization; 
           (2) the debt is incurred primarily for a personal, family, 
        or household purpose; and 
           (3) the debt is payable in installments or a finance charge 
        is made. 
           (g) "Credit" means the right granted by a financial 
        institution to a borrower to defer payment of a debt, to incur 
        debt and defer its payment, or to purchase property or services 
        and defer payment. 
           (h) "Credit card" means a card or device issued under an 
        arrangement pursuant to which a financial institution gives to a 
        cardholder the privilege of obtaining credit from the financial 
        institution or other person in purchasing or leasing property or 
        services, obtaining loans, or otherwise.  A transaction is 
        "pursuant to a credit card" only if credit is obtained according 
        to the terms of the arrangement by transmitting information 
        contained on the card or device orally, in writing, by 
        mechanical or electronic methods, or in any other manner.  A 
        transaction is not "pursuant to a credit card" if the card or 
        device is used solely in that transaction to: 
           (1) identify the cardholder or evidence the cardholder's 
        creditworthiness and credit is not obtained according to the 
        terms of the arrangement; 
           (2) obtain a guarantee of payment from the cardholder's 
        deposit account, whether or not the payment results in a credit 
        extension to the cardholder by the financial institution; or 
           (3) effect an immediate transfer of funds from the 
        cardholder's deposit account by electronic or other means, 
        whether or not the transfer results in a credit extension to the 
        cardholder by the financial institution. 
           (i) "Credit sale contract" means a contract evidencing a 
        credit sale.  "Credit sale" means a sale of goods or services, 
        or an interest in land, in which: 
           (1) credit is granted by a seller who regularly engages as 
        a seller in credit transactions of the same kind; and 
           (2) the debt is payable in installments or a finance charge 
        is made. 
           (j) "Finance charge" has the meaning given in the Code of 
        Federal Regulations, title 12, part 226, except that the 
        following will not in any event be considered a finance charge: 
           (1) a charge as a result of default or delinquency under 
        subdivision 6 if made for actual unanticipated late payment, 
        delinquency, default, or other similar occurrence, and a charge 
        made for an extension or deferment under subdivision 5, unless 
        the parties agree that these charges are finance charges; 
           (2) an additional charge under subdivision 6; or 
           (3) a discount, if a financial institution purchases a loan 
        at less than the face amount of the obligation or purchases or 
        satisfies obligations of a cardholder pursuant to a credit card 
        and the purchase or satisfaction is made at less than the face 
        amount of the obligation.; 
           (4) fees paid by a borrower to a broker, provided the 
        financial institution or a person described in subdivision 4 
        does not require use of the broker to obtain credit; or 
           (5) a commission, expense reimbursement, or other sum 
        received by a financial institution or a person described in 
        subdivision 4 in connection with insurance described in 
        subdivision 6. 
           (k) "Financial institution" means a state or federally 
        chartered bank, a state or federally chartered bank and trust, a 
        trust company with banking powers, a state or federally 
        chartered saving bank, a state or federally chartered savings 
        association, an industrial loan and thrift company, or a 
        regulated lender. 
           (l) "Loan" means: 
           (1) the creation of debt by the financial institution's 
        payment of money to the borrower or a third person for the 
        account of the borrower; 
           (2) the creation of debt pursuant to a credit card in any 
        manner, including a cash advance or the financial institution's 
        honoring a draft or similar order for the payment of money drawn 
        or accepted by the borrower, paying or agreeing to pay the 
        borrower's obligation, or purchasing or otherwise acquiring the 
        borrower's obligation from the obligee or the borrower's 
        assignee; 
           (3) the creation of debt by a cash advance to a borrower 
        pursuant to an overdraft line of credit arrangement; 
           (4) the creation of debt by a credit to an account with the 
        financial institution upon which the borrower is entitled to 
        draw immediately; 
           (5) the forbearance of debt arising from a loan; and 
           (6) the creation of debt pursuant to open-end credit. 
           "Loan" does not include the forbearance of debt arising 
        from a sale or lease, a credit sale contract, or an overdraft 
        from a person's deposit account with a financial institution 
        which is not pursuant to a written agreement to pay overdrafts 
        with the right to defer repayment thereof. 
           (m) "Official fees" means: 
           (1) fees and charges which actually are or will be paid to 
        public officials for determining the existence of or for 
        perfecting, releasing, terminating, or satisfying a security 
        interest or mortgage relating to a loan or credit sale, and any 
        separate fees or charges which actually are or will be paid to 
        public officials for recording a notice described in section 
        580.032, subdivision 1; and 
           (2) premiums payable for insurance in lieu of perfecting a 
        security interest or mortgage otherwise required by a financial 
        institution in connection with a loan or credit sale, if the 
        premium does not exceed the fees and charges described in clause 
        (1), which would otherwise be payable. 
           (n) "Organization" means a corporation, government, 
        government subdivision or agency, trust, estate, partnership, 
        joint venture, cooperative, limited liability company, limited 
        liability partnership, or association. 
           (o) "Person" means a natural person or an organization. 
           (p) "Principal" means the total of: 
           (1) the amount paid to, received by, or paid or repayable 
        for the account of, the borrower; and 
           (2) to the extent that payment is deferred: 
           (i) the amount actually paid or to be paid by the financial 
        institution for additional charges permitted under this section; 
        and 
           (ii) prepaid finance charges. 
           Sec. 13.  Minnesota Statutes 1996, section 47.59, 
        subdivision 4, is amended to read: 
           Subd. 4.  [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 
        PARTY.] (a) A person may enter into a credit sale contract for 
        sale to a financial institution and a financial institution may 
        purchase and enforce the contract, if the annual percentage rate 
        provided for in the contract does not exceed that permitted in 
        this section, or, in the case of contracts governed by sections 
        168.66 to 168.77 a retail installment sale of a motor vehicle as 
        defined in section 168.66, the annual percentage rates permitted 
        by subdivision 4a. 
           (b) The annual percentage rate may not exceed the 
        equivalent of the greater of either of the following:  
           (1) the total of:  
           (i) 36 percent per year on that part of the unpaid balances 
        of the amount financed that is $300 or less; 
           (ii) 21 percent per year on that part of the unpaid 
        balances of the amount financed which exceeds $300 but does not 
        exceed $1,000; and 
           (iii) 15 percent per year on that part of the unpaid 
        balances of the amount financed which exceeds $1,000; or 
           (2) 19 percent per year on the unpaid balances of the 
        amount financed.  
           (c) This subdivision does not limit or restrict the manner 
        of calculating the finance charge whether by way of add-on, 
        discount, discount points, single annual percentage rate, 
        precomputed charges, variable rate, interest in advance, 
        compounding, or otherwise, if the annual percentage rate 
        calculated under paragraph (d) does not exceed that permitted by 
        this section.  The finance charge may be contracted for and 
        earned at the single annual percentage rate that would earn the 
        same finance charge as the graduated rates when the debt is paid 
        according to the agreed terms and the finance charge is 
        calculated under paragraph (d).  If the finance charge is 
        calculated and collected in advance, or included in the 
        principal amount of the contract, and the borrower prepays the 
        contract in full, the financial institution shall credit the 
        borrower with a refund of the charge to the extent the annual 
        percentage rate yield on the contract would exceed the annual 
        percentage rate on the contract as originally determined under 
        paragraph (d) and taking into account the prepayment.  For the 
        purpose of calculating the refund under this subdivision, the 
        financial institution may assume that the contract was paid 
        before the date of prepayment according to the schedule of 
        payments under the contract and that all payments were paid on 
        their due dates.  For contracts repayable in substantially equal 
        successive monthly installments, the financial institution may 
        calculate the refund as the portion of the finance charge 
        allocable on an actuarial basis to all wholly unexpired payment 
        periods following the date of prepayment, based on the annual 
        percentage rate on the contract as originally determined under 
        paragraph (d), and for the purpose of calculating the refund may 
        assume that all payments are made on the due date.  
           (d) The annual percentage rate must be calculated in 
        accordance with Code of Federal Regulations, title 12, part 226, 
        except that the following will not in any event be considered a 
        finance charge:  
           (1) a charge as a result of delinquency or default under 
        subdivision 6 if made for actual unanticipated late payment, 
        delinquency, default, or other similar occurrence, and a charge 
        made for an extension or deferment under subdivision 5, unless 
        the parties agree that these charges are finance charges; 
           (2) an additional charge under subdivision 6; or 
           (3) a discount, if a financial institution purchases a 
        contract evidencing a credit sale at less than the face amount 
        of the obligation or purchases or satisfies obligations of a 
        cardholder according to a credit card and the purchase or 
        satisfaction is made at less than the face amount of the 
        obligation.  
           Sec. 14.  Minnesota Statutes 1996, section 47.59, 
        subdivision 5, is amended to read: 
           Subd. 5.  [EXTENSIONS, DEFERMENTS, AND CONVERSION TO 
        INTEREST BEARING.] (a) The parties may agree in writing, either 
        in the loan contract or credit sale contract or in a subsequent 
        agreement, to a deferment of wholly unpaid installments.  For 
        precomputed loans and credit sale contracts, the manner of 
        deferment charge shall be determined as provided for in this 
        section.  A deferment postpones the scheduled due date of the 
        earliest unpaid installment and all subsequent installments as 
        originally scheduled, or as previously deferred, for a period 
        equal to the deferment period.  The deferment period is that 
        period during which no installment is scheduled to be paid by 
        reason of the deferment.  The deferment charge for a one-month 
        period may not exceed the applicable charge for the installment 
        period immediately following the due date of the last undeferred 
        payment.  A proportionate charge may be made for deferment 
        periods of more or less than one month.  A deferment charge is 
        earned pro rata during the deferment period and is fully earned 
        on the last day of the deferment period.  If a loan or credit 
        sale is prepaid in full during a deferment period, the financial 
        institution shall make or credit to the borrower a refund of the 
        unearned deferment charge in addition to any other refund or 
        credit made for prepayment of the loan or credit sale in full.  
           For the purpose of this subdivision, "applicable charge" 
        means the amount of finance charge attributable to each monthly 
        installment period for the loan or credit sale contract.  The 
        applicable charge is computed as if each installment period were 
        one month and any charge for extending the first installment 
        period beyond the one month, or reduction in charge for a first 
        installment less than one month, is ignored.  The applicable 
        charge for any installment period is that which would have been 
        made for the period had the loan been made on an 
        interest-bearing basis at the single annual percentage rate 
        provided for in the contract based upon the assumption that all 
        payments were made according to schedule.  For convenience in 
        computation, the financial institution may round the single 
        annual rate to the nearest one quarter of one percent. 
           (b) Subject to a refund of unearned finance or deferment 
        charge required by this section, a financial institution may 
        convert a loan or credit sale contract to an interest bearing 
        balance, if: 
           (1) the loan contract or credit sale contract so provides 
        and is subject to a change of the terms of the written agreement 
        between the parties; or 
           (2) the loan contract so provides and two or more 
        installments are delinquent one full month or more on any due 
        date. 
           Thereafter, and in lieu of any other default, extension, or 
        deferment charges, the single annual percentage rate must be 
        determined under the applicable charge provisions of this 
        subdivision the single annual percentage rate and other charges 
        must be determined as provided under this section for 
        interest-bearing transactions. 
           Sec. 15.  Minnesota Statutes 1996, section 47.59, 
        subdivision 6, is amended to read: 
           Subd. 6.  [ADDITIONAL CHARGES.] (a) For purposes of this 
        subdivision, "financial institution" includes a person described 
        in subdivision 4, paragraph (a).  In addition to the finance 
        charges permitted by this section, a financial institution may 
        contract for and receive the following additional charges that 
        may be included in the principal amount of the loan or credit 
        sale unpaid balances:  
           (1) official fees and taxes; 
           (2) charges for insurance as described in paragraph (b); 
           (3) with respect to a loan or credit sale contract secured 
        by real estate, the following "closing costs," if they are bona 
        fide, reasonable in amount, and not for the purpose of 
        circumvention or evasion of this section: 
           (i) fees or premiums for title examination, abstract of 
        title, title insurance, surveys, or similar purposes; 
           (ii) fees for preparation of a deed, mortgage, settlement 
        statement, or other documents, if not paid to the financial 
        institution; 
           (iii) escrows for future payments of taxes, including 
        assessments for improvements, insurance, and water, sewer, and 
        land rents; 
           (iv) fees for notarizing deeds and other documents; 
           (v) appraisal and credit report fees; and 
           (vi) fees for determining whether any portion of the 
        property is located in a flood zone and fees for ongoing 
        monitoring of the property to determine changes, if any, in 
        flood zone status; 
           (4) a delinquency charge on a payment, including the 
        minimum payment due in connection with the open-end credit, not 
        paid in full on or before the tenth day after its due date in an 
        amount not to exceed five percent of the amount of the payment 
        or $5.20, whichever is greater; 
           (5) for a returned check or returned automatic payment 
        withdrawal request, an amount not in excess of the service 
        charge limitation in section 332.50; and 
           (6) charges for other benefits, including insurance, 
        conferred on the borrower that are of a type that is not for 
        credit. 
           (b) An additional charge may be made for insurance written 
        in connection with the loan or credit sale contract, which may 
        be included in the principal amount of the loan or credit sale 
        unpaid balances:  
           (1) with respect to insurance against loss of or damage to 
        property, or against liability arising out of the ownership or 
        use of property, if the financial institution furnishes a clear, 
        conspicuous, and specific statement in writing to the borrower 
        setting forth the cost of the insurance if obtained from or 
        through the financial institution and stating that the borrower 
        may choose the person through whom the insurance is to be 
        obtained; 
           (2) with respect to credit insurance or mortgage insurance 
        providing life, accident, health, or unemployment coverage, if 
        the insurance coverage is not required by the financial 
        institution, and this fact is clearly and conspicuously 
        disclosed in writing to the borrower, and the borrower gives 
        specific, dated, and separately signed affirmative written 
        indication of the borrower's desire to do so after written 
        disclosure to the borrower of the cost of the insurance; and 
           (3) with respect to the vendor's single interest insurance, 
        but only (i) to the extent that the insurer has no right of 
        subrogation against the borrower; and (ii) to the extent that 
        the insurance does not duplicate the coverage of other insurance 
        under which loss is payable to the financial institution as its 
        interest may appear, against loss of or damage to property for 
        which a separate charge is made to the borrower according to 
        clause (1); and (iii) if a clear, conspicuous, and specific 
        statement in writing is furnished by the financial institution 
        to the borrower setting forth the cost of the insurance if 
        obtained from or through the financial institution and stating 
        that the borrower may choose the person through whom the 
        insurance is to be obtained. 
           (c) In addition to the finance charges and other additional 
        charges permitted by this section, a financial institution may 
        contract for and receive the following additional charges in 
        connection with open-end credit, which may be included in the 
        principal amount of the loan or balance upon which the finance 
        charge is computed:  
           (1) annual charges, not to exceed $50 per annum, payable in 
        advance, for the privilege of opening and maintaining open-end 
        credit; 
           (2) charges for the use of an automated teller machine; 
           (3) charges for any monthly or other periodic payment 
        period in which the borrower has exceeded or, except for the 
        financial institution's dishonor would have exceeded, the 
        maximum approved credit limit, in an amount not in excess of the 
        service charge permitted in section 332.50; 
           (4) charges for obtaining a cash advance in an amount not 
        to exceed the service charge permitted in section 332.50; and 
           (5) charges for check and draft copies and for the 
        replacement of lost or stolen credit cards.  
           (d) In addition to the finance charges and other additional 
        charges permitted by this section, a financial institution may 
        contract for and receive a one-time loan administrative fee not 
        exceeding $25 in connection with closed-end credit, which may be 
        included in the principal balance upon which the finance charge 
        is computed.  This paragraph applies only to closed-end credit 
        in an original principal amount of $4,320 or less.  The 
        determination of an original principal amount must exclude the 
        administrative fee contracted for and received according to this 
        paragraph. 
           Sec. 16.  Minnesota Statutes 1996, section 47.59, 
        subdivision 12, is amended to read: 
           Subd. 12.  [CONSUMER PROTECTIONS.] (a) Financial 
        institutions shall comply with the requirements of the federal 
        Truth in Lending Act, United States Code, title 15, sections 
        1601 to 1693, in connection with a consumer loan or credit sale 
        for a consumer purpose where the federal Truth in Lending Act is 
        applicable.  A financial institution shall give the following 
        disclosure to the borrower in writing at the time an open-end 
        credit account is established if the financial institution 
        imposes a loan fee, points, or similar charge that relates to 
        the opening of the account which is not included in the annual 
        percentage rate given pursuant to the federal Truth in Lending 
        Act:  "YOU HAVE BEEN ASSESSED FINANCE CHARGES, OR POINTS, WHICH 
        ARE NOT INCLUDED IN THE ANNUAL PERCENTAGE RATE.  THESE CHARGES 
        MAY BE REFUNDED, IN WHOLE OR IN PART, IF YOU DO NOT USE YOUR 
        LINE OF CREDIT OR IF YOU REPAY YOUR LINE OF CREDIT EARLY.  THESE 
        CHARGES INCREASE THE COST OF YOUR CREDIT." 
           (b) Financial institutions shall comply with the following 
        consumer protection provisions in connection with a consumer 
        loan or credit sale for a consumer purpose:  sections 325G.02 to 
        325G.05; 325G.06 to 325G.11; 325G.15 to 325G.22; and 325G.29 to 
        325G.36, and Code of Federal Regulations, title 12, part 535, 
        where those statutes or regulations are applicable.  
           (c) An assignment of a consumer's earnings by the consumer 
        to a financial institution as payment or as security for payment 
        of a debt arising out of a consumer loan or consumer credit sale 
        is unenforceable by the financial institution and revocable by 
        the consumer except where the assignment:  (1) by its terms is 
        revocable at the will of the consumer; (2) is a payroll 
        deduction plan or preauthorized payment plan, beginning at the 
        time of the transaction, in which the consumer authorizes a 
        series of wage deductions as a method of making each payment; or 
        (3) applies only to wages or other earnings already earned at 
        the time of the assignment.  
           Sec. 17.  Minnesota Statutes 1996, section 47.61, 
        subdivision 3, is amended to read: 
           Subd. 3.  (a) "Electronic financial terminal" means an 
        electronic information processing device that is established to 
        do either or both of the following: 
           (1) capture the data necessary to initiate financial 
        transactions; or 
           (2) through its attendant support system, store or initiate 
        the transmission of the information necessary to consummate a 
        financial transaction. 
           (b) "Electronic financial terminal" does not include: 
           (1) a telephone; 
           (2) an electronic information processing device that is 
        used internally by a financial institution to conduct the 
        business activities of the institution; or 
           (3) an electronic point-of-sale terminal operated by a 
        retailer that is used to process payments for the purchase of 
        goods and services by consumers, and which also may be used to 
        obtain cash advances or cash back not to exceed $25 and only if 
        incidental to the retail sale transactions, through the use of 
        credit cards or debit cards, provided that the payment 
        transactions using debit cards are subject to the federal 
        Electronic Funds Transfer Act, United States Code, title 12, 
        sections 1693 et seq., and Regulation E of the Federal Reserve 
        Board, Code of Federal Regulations, title 12, subpart 205.2; 
        this clause does not exempt the retailer from liability for 
        negligent conduct or intentional misconduct of the operator 
        under section 47.69, subdivision 5; 
           (4) stored-value cards to only process transactions other 
        than those authorized by this section.  Stored-value cards are 
        transaction cards having magnetic stripes or computer chips that 
        enable electronic value to be added or deducted as needed; or 
           (5) a personal computer possessed by and operated 
        exclusively by the account holder. 
           Sec. 18.  Minnesota Statutes 1996, section 47.64, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [PROHIBITION.] An agreement to share electronic 
        financial terminals may not contain provisions distinguishing 
        between cards issued by United States financial institutions and 
        cards issued by Canadian financial institutions relative to a 
        fee that may be charged to a card holder by the owner or 
        operator of an electronic financial terminal, if the terminal is 
        located within 50 miles of the Canadian border, and the 
        enforcement of any such provision is prohibited. 
           Sec. 19.  Minnesota Statutes 1996, section 47.75, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.] 
        A commercial bank, savings bank, savings association, credit 
        union, or industrial loan and thrift company may act as trustee 
        or custodian under the Federal Self-Employed Individual Tax 
        Retirement Act of 1962, as amended, of a medical savings account 
        under the Federal Health Insurance Portability and 
        Accountability Act of 1996, as amended, and also under the 
        Federal Employee Retirement Income Security Act of 1974, as 
        amended.  The trustee or custodian may accept the trust funds if 
        the funds are invested only in savings accounts or time deposits 
        in the commercial bank, savings bank, savings association, 
        credit union, or industrial loan and thrift company.  All funds 
        held in the fiduciary capacity may be commingled by the 
        financial institution in the conduct of its business, but 
        individual records shall be maintained by the fiduciary for each 
        participant and shall show in detail all transactions engaged 
        under authority of this subdivision.  
           Sec. 20.  Minnesota Statutes 1996, section 48.01, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BANKING INSTITUTION.] The term "banking 
        institution" means any bank, trust company, bank and trust 
        company, or savings bank which is now or may hereafter be 
        organized under the laws of this state.  For purposes of 
        sections 48.38, 48.84, and 501B.10 501B.151, subdivision 6 11, 
        and to the extent permitted by federal law, "banking 
        institution" includes any national banking association or 
        affiliate exercising trust powers in this state. 
           Sec. 21.  Minnesota Statutes 1996, section 48.09, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [QUALIFIED SUBCHAPTER S SUBSIDIARY.] A bank that 
        has met the eligibility requirements under title I, subtitle C 
        of the Small Business Job Protection Act of 1996 or related 
        state of Minnesota tax law may apply to the commissioner for 
        approval of a plan and agreement for a distribution of earnings 
        to the shareholder(s) of the bank on a basis other than a 
        dividend under subdivisions 1 and 2.  Approval of a plan of 
        distribution under this subdivision may be rescinded by the 
        commissioner upon 90-day prior notice to the bank.  Failure to 
        comply with this notice or qualification of a distribution under 
        subdivisions 1 and 2 is considered a violation subject to the 
        commissioner's action under section 45.027 or 46.24. 
           Sec. 22.  Minnesota Statutes 1996, section 48.15, 
        subdivision 2, is amended to read: 
           Subd. 2.  The commissioner of commerce may authorize banks, 
        bank and trust companies, or trust companies organized under the 
        laws of this state to engage in any banking or trust activity in 
        which banks subject to the jurisdiction of the federal 
        government may hereafter be authorized to engage by federal 
        legislation, ruling, or regulation and those activities 
        authorized in section 48.61, subdivision 7, paragraph (a), 
        clause (3).  The commissioner may not authorize state banks as 
        defined by section 48.01, to engage in any banking activity 
        prohibited by the laws of this state. 
           Sec. 23.  Minnesota Statutes 1996, section 48.15, 
        subdivision 4, is amended to read: 
           Subd. 4.  [RETIREMENT AND MEDICAL SAVINGS ACCOUNTS.] A 
        state bank may act as trustee or custodian of a self-employed 
        retirement plan under the Federal Self-Employed Individual Tax 
        Retirement Act of 1962, as amended, of a medical savings account 
        under the Federal Health Insurance Portability and 
        Accountability Act of 1996, as amended, and of an individual 
        retirement account under the Federal Employee Retirement Income 
        Security Act of 1974, as amended, if the bank's duties as 
        trustee or custodian are essentially ministerial or custodial in 
        nature and the funds are invested only (1) in the bank's own 
        savings or time deposits; or (2) in any other assets at the 
        direction of the customer if the bank does not exercise any 
        investment discretion, invest the funds in collective investment 
        funds administered by it, or provide any investment advice with 
        respect to those account assets. 
           Affiliated discount brokers may be utilized by the bank 
        acting as trustee or custodian for self-directed IRAs, if 
        specifically authorized and directed in appropriate documents.  
        The relationship between the affiliated broker and the bank must 
        be fully disclosed.  Brokerage commissions to be charged to the 
        IRA by the affiliated broker should be accurately disclosed.  
        Provisions should be made for disclosure of any changes in 
        commission rates prior to their becoming effective.  The 
        affiliated broker may not provide investment advice to the 
        customer.  All funds held in the fiduciary capacity may be 
        commingled by the financial institution in the conduct of its 
        business, but individual records shall be maintained by the 
        fiduciary for each participant and shall show in detail all 
        transactions engaged under authority of this subdivision.  The 
        authority granted by this section is in addition to, and not 
        limited by, section 47.75. 
           Sec. 24.  Minnesota Statutes 1996, section 48.24, 
        subdivision 2, is amended to read: 
           Subd. 2.  Loans not exceeding 25 percent of such capital 
        and surplus made upon first mortgage security on improved real 
        estate in the any state in which the bank or a branch 
        established under section 49.411 is located, or in an adjoining 
        any state within 20 miles of the place where the bank adjoining 
        a state in which the bank or a branch established under section 
        49.411 is located, shall not constitute a liability of the maker 
        of the notes secured by such mortgages within the meaning of the 
        foregoing provision limiting liability, but shall be an actual 
        liability of the maker.  These mortgage loans shall be limited 
        to, and in no case exceed, 50 percent of the cash value of the 
        security covered by the mortgage, except mortgage loans 
        guaranteed as provided by the servicemen's readjustment act of 
        1944, as now or hereafter amended, or for which there is a 
        commitment to so guarantee or for which a conditional guarantee 
        has been issued, which loans shall in no case exceed 60 percent 
        of the cash value of the security covered by such mortgage.  For 
        the purposes of this subdivision, real estate is improved when 
        substantial and permanent development or construction has 
        contributed substantially to its value, and agricultural land is 
        improved when farm crops are regularly raised on such land 
        without further substantial improvements.  
           Sec. 25.  Minnesota Statutes 1996, section 48.24, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [RIGHT TO ACT TO AVOID LOSS.] This section does 
        not prohibit the bank from advancing funds that may be 
        reasonably necessary to avoid loss on a loan or investment made 
        subject to this section or an obligation created in good faith.  
        The rights under this subdivision are in addition to and not 
        inconsistent with section 48.21. 
           Sec. 26.  [48.476] [REPRESENTATIVE TRUST OFFICE.] 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the terms in this subdivision have the meanings given. 
           (a) "Representative trust office" means an office at which 
        a trust company or bank with trust powers has been authorized by 
        the commissioner to engage in a trust business other than acting 
        as a fiduciary. 
           (b) "Acting as a fiduciary" means to: 
           (1) accept or execute trusts, including to: 
           (i) act as trustee under a written agreement; 
           (ii) receive money or other property in its capacity as a 
        trustee for investment in real or personal property; 
           (iii) act as trustee and perform the fiduciary duties 
        committed or transferred to it by order of court of competent 
        jurisdiction; 
           (iv) act as trustee of the estate of a deceased person; or 
           (v) act as trustee for a minor or incapacitated person; 
           (2) administer in any other fiduciary capacity real or 
        personal property; or 
           (3) act according to order of court of competent 
        jurisdiction as executor or administrator of the estate of a 
        deceased person or as a guardian or conservator for a minor or 
        incapacitated person. 
           Subd. 2.  [AUTHORITY FOR REPRESENTATIVE TRUST OFFICES; 
        PRIOR WRITTEN NOTICE.] (a) A state trust institution may 
        establish or acquire and maintain representative trust offices 
        anywhere in this state.  A state trust institution desiring to 
        establish or acquire and maintain such an office shall file a 
        written notice with the commissioner setting forth the name of 
        the state trust institution and the location of the proposed 
        additional office and furnish a copy of the resolution adopted 
        by the board authorizing the additional office. 
           (b) The state trust institution may begin business at the 
        additional office on the 31st day after the date the 
        commissioner receives the notice, unless the commissioner 
        specifies an earlier or later date. 
           (c) The 30-day period of review may be extended by the 
        commissioner on a determination that the written notice raises 
        issues that require additional information or additional time 
        for analysis.  If the period of review is extended, the state 
        trust institution may establish the additional office only on 
        prior written approval by the commissioner. 
           (d) The commissioner may deny approval of the additional 
        office if the commissioner finds that the state trust 
        institution lacks sufficient financial resources to undertake 
        the proposed expansion without adversely affecting its safety or 
        soundness or that the proposed office would be contrary to the 
        public interest. 
           Subd. 3.  [AUTHORITY FOR OUT-OF-STATE TRUST OFFICES; PRIOR 
        WRITTEN NOTICE.] (a) A state trust institution may establish and 
        maintain representative trust office or acquire and maintain an 
        office in a state other than this state.  A state trust 
        institution desiring to establish or acquire and maintain an 
        office in another state under this section shall file a notice 
        on a form prescribed by the commissioner, which shall set forth 
        the name of the state trust institution, the location of the 
        proposed office, and whether the laws of the jurisdiction where 
        the office will be located permit the office to be maintained by 
        the state trust institution; and furnish a copy of the 
        resolution adopted by the board authorizing the out-of-state 
        office. 
           (b) The state trust institution may begin business at the 
        additional office on the 31st day after the date the 
        commissioner receives the notice, unless the commissioner 
        specifies an earlier or later date. 
           (c) The 30-day period of review may be extended by the 
        commissioner on a determination that the written notice raises 
        issues that require additional information or additional time 
        for analysis.  If the period of review is extended, the state 
        trust institution may establish the additional office only on 
        prior written approval by the commissioner. 
           (d) The commissioner may deny approval of the additional 
        office if the commissioner finds that the state trust 
        institution lacks sufficient financial resources to undertake 
        the proposed expansion without adversely affecting its safety or 
        soundness or that the proposed office would be contrary to the 
        public interest.  In acting on the notice, the commissioner 
        shall consider the views of the appropriate bank supervisory 
        agencies. 
           Sec. 27.  Minnesota Statutes 1996, section 48.512, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [IDENTIFICATION NOT REQUIRED FOR DEBIT CARD 
        TRANSACTIONS.] The identification requirements of subdivision 4 
        do not apply to a transaction account that is accessible 
        exclusively by debit card.  A debit card activates a transaction 
        account at a financial intermediary by means of an electronic 
        information processing device and contemporaneously completes 
        the debt to the account only on the condition that funds are 
        available and confirmed. 
           Sec. 28.  Minnesota Statutes 1996, section 48.61, 
        subdivision 7, is amended to read: 
           Subd. 7.  [SUBSIDIARIES.] (a) A state bank or trust company 
        may organize, acquire, or invest in a subsidiary located in this 
        state for the purposes of engaging in one or more of the 
        following activities, subject to the prior written approval of 
        the commissioner: 
           (1) any activity, not including receiving deposits or 
        paying checks, that a state bank is authorized to engage in 
        under state law or rule or under federal law or regulation 
        unless the activity is prohibited by the laws of this state; 
           (2) any activity that a bank clerical service corporation 
        is authorized to engage in under section 48.89; and 
           (3) any other activity authorized for a national bank, a 
        bank holding company, or a subsidiary of a national bank or bank 
        holding company under federal law or regulation of general 
        applicability, and approved by the commissioner by rule.  
           (b) A bank or trust company subsidiary may engage in an 
        activity under this section only upon application together with 
        a filing fee of $250 and with the prior written approval of the 
        commissioner.  In approving or denying a proposed activity, the 
        commissioner shall consider the financial and management 
        strength of the bank or trust company, the current written 
        operating plan and policies of the proposed subsidiary 
        corporation, the bank or trust company's community reinvestment 
        record, and whether the proposed activity should be conducted 
        through a subsidiary of the bank or trust company. 
           (c) The aggregate amount of funds invested in either an 
        equity or loan capacity in all of the subsidiaries of the bank 
        or trust company authorized under this subdivision shall not 
        exceed 25 percent of the capital stock and paid in surplus of 
        the bank or trust company. 
           (d) A subsidiary organized or acquired under this 
        subdivision is subject to the examination and enforcement 
        authority of the commissioner under chapters 45 and 46 to the 
        same extent as a state bank or trust company. 
           (e) For the purposes of this section, "subsidiary" means a 
        corporation of which more than 50 percent of the voting shares 
        are owned or controlled by the bank or trust company. 
           Sec. 29.  Minnesota Statutes 1996, section 48.61, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [SUBSIDIARIES ORGANIZED FOR PURPOSES OF 
        CORPORATE REORGANIZATION.] A subsidiary may be organized solely 
        for purposes of liquidating assets in a reorganization subject 
        to the following conditions: 
           (1) the subsidiary must be a bank holding company whose 
        assets and liabilities and subsidiary bank control have been 
        removed; and 
           (2) the operations of the subsidiary must be limited to the 
        time period reasonably related to the completion of the 
        reorganization. 
           Sec. 30.  Minnesota Statutes 1996, section 49.215, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CERTIFICATE OF LIQUIDATION.] Upon compliance 
        with the foregoing and upon filing with the commissioner an 
        affidavit of the president and cashier or vice president 
        conducting the duties of cashier of said financial institution 
        that the provisions of subdivision 4 have been complied with and 
        that all depositors and other creditors have been paid in full, 
        or, if any dividends or any moneys set apart for the payment of 
        claims remain unpaid and the places of residence of the 
        depositors or other creditors are unknown to the persons making 
        the affidavit, that sufficient funds have been turned over to 
        the commissioner for payment into the state treasury to pay said 
        depositors and other creditors, in the manner provided by 
        subdivision 5, the commissioner shall issue a certificate of 
        liquidation, and, upon the filing for record of said certificate 
        of liquidation in the office of the secretary of state and in 
        the office of the county recorder of the county of the principal 
        place of business of such financial institution immediately 
        prior to its voluntary liquidation, the liquidation of said 
        financial institution shall be complete, and its corporate 
        existence shall thereupon terminate.  
           Sec. 31.  Minnesota Statutes 1996, section 49.33, is 
        amended to read: 
           49.33 [CONSOLIDATION AND MERGER, WHEN AUTHORIZED.] 
           Subject to the provisions of sections 49.33 to 49.41, with 
        the written consent of the commissioner of commerce, any bank of 
        discount and deposit, savings bank, or trust company may effect 
        a transfer of its assets and liabilities to another bank, 
        savings bank, or trust company for the purpose of consolidating 
        or merging, but the same shall be without prejudice to the 
        creditors of either.  
           Sec. 32.  Minnesota Statutes 1996, section 49.36, 
        subdivision 4, is amended to read: 
           Subd. 4.  [NOTICE OF PROPOSED ACQUISITION.] The successor 
        bank shall give reasonable notice of the acquisition to each of 
        the depositors and creditors of an acquired bank or savings 
        association within 30 days after the order is activated at a 
        time and in a form determined in the discretion of the 
        commissioner.  This notice may be coordinated to include federal 
        regulator concerns for impact on deposit insurance of accounts 
        and information designed to alert depositors and creditors of 
        any changes in procedures or practices.  If detached facilities 
        are to be closed as a result of transactions authorized by this 
        section, adequate notice shall be provided by the bank prior to 
        closing, unless the commissioner has acted to prevent the 
        probable failure of the bank or savings association, and then as 
        soon as practicable after the acquisition date. 
           Sec. 33.  Minnesota Statutes 1996, section 49.42, is 
        amended to read: 
           49.42 [STATE BANK.] 
           As used in sections 49.42 to 49.46: 
           "State bank" means any bank, savings bank, trust company, 
        or bank and trust company which is now or may hereafter be 
        organized under the laws of this state.  
           "National banking association" means a bank, savings bank, 
        bank and trust company, or bank exclusively exercising trust 
        powers organized under the laws of the United States. 
           Sec. 34.  Minnesota Statutes 1996, section 50.245, is 
        amended to read: 
           50.245 [BRANCHES; ACQUISITIONS.] 
           Subdivision 1.  [AUTHORITY FOR BRANCH OFFICES.] A savings 
        bank may establish any number of detached facilities as may be 
        approved by the commissioner of commerce pursuant to sections 
        47.51 to 47.57.  The savings bank shall not change the location 
        of a detached facility without prior written approval of the 
        commissioner of commerce.  A savings bank may establish a loan 
        production office, without restriction as to geographical 
        location, upon written notice to the commissioner of commerce. 
           Subd. 2.  [AUTHORITY FOR BRANCH OFFICES IN OTHER STATES.] 
        The authorization contained in subdivision 1 is in addition to 
        the authority granted savings banks in section 47.52.  A savings 
        bank chartered in this state, whether or not the subsidiary of a 
        savings bank holding company, may, by acquisition, merger, 
        purchase, and assumption of some or all assets and liabilities, 
        consolidation, or de novo formation, establish or operate 
        detached facilities in another state on the same terms and 
        conditions and subject to the same limitations and restrictions 
        as are applicable to the establishment of branches by national 
        banks located in Minnesota, except that approval of the 
        comptroller of the currency shall not be required for such 
        detached facilities has the same authority as a bank to conduct 
        interstate mergers affecting interstate branching under section 
        49.411.  The merger may be between banks and with other banks or 
        savings banks. 
           Subd. 3.  [RECIPROCATING STATE INTERSTATE ACQUISITIONS.] A 
        savings bank chartered in this state and a savings bank holding 
        company with its principal offices in this state may acquire 
        control of a financial institution chartered in a reciprocating 
        state or, subject to applicable federal law, any other state or 
        a financial institution holding company with principal offices 
        in a reciprocating state or, subject to applicable federal law, 
        any other state.  A savings bank chartered in a reciprocating 
        state or, subject to applicable federal law, any other state and 
        a savings bank holding company with principal offices in a 
        reciprocating state or, subject to applicable federal law, any 
        other state may acquire control of a savings bank chartered in 
        this state or a savings bank holding company with principal 
        offices in this state.  
           Subd. 4.  [PROCEDURAL REQUIREMENTS.] Procedural 
        requirements equivalent to those contained in sections 48.90 to 
        48.995 48.99 apply to reciprocal interstate branching and 
        acquisitions by savings banks and savings bank holding companies.
           Subd. 5.  [DEFINITIONS.] For the purpose of this section, 
        the terms defined in this subdivision have the meanings given 
        them. 
           (a) "Financial institution" means a bank, savings bank, 
        savings association, or trust company, or credit union, whether 
        chartered under the laws of this state, another state or 
        territory, or under the laws of the United States. 
           (b) "Loan production office" means a place of business at 
        which a savings bank provides lending if the loans are approved 
        at the main office or detached facility of the savings bank, but 
        at which a savings bank may not accept deposits except through a 
        remote service unit. 
           (c) "Reciprocating state" means a state that authorizes the 
        acquisition of control of financial institutions chartered in 
        that state and financial institution holding companies with 
        principal offices in that state by a savings bank chartered in 
        this state or savings bank holding company with principal 
        offices in this state under conditions substantially similar to 
        those imposed by the laws of Minnesota, as determined by the 
        commissioner of commerce. 
           (d) "Remote service unit" means an electronic financial 
        terminal as defined in section 47.61. 
           Subd. 6.  [COMMISSIONER'S AUTHORITY.] The authority of the 
        commissioner of commerce to approve a transaction under this 
        section is in addition to that provided for in section 49.48. 
           Sec. 35.  Minnesota Statutes 1996, section 51A.38, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERALLY.] Real estate loans and other 
        loans secured by a mortgage on real estate that are eligible for 
        investment by an association under sections 51A.01 to 51A.57 may 
        be written according to this section and section 
        51A.385 51A.386, or upon any other plan approved by the 
        commissioner.  
           Sec. 36.  Minnesota Statutes 1996, section 52.04, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [CREDIT SALES OR SERVICE CONTRACTS.] A person 
        may enter into a credit sale or service contract for sale to a 
        state or federal credit union doing business in this state, and 
        a credit union may purchase and enforce the contract under the 
        terms and conditions set forth in section 47.59, subdivisions 
        4 and 6 to 14. 
           Sec. 37.  Minnesota Statutes 1996, section 52.04, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [COMPARABILITY WITH FEDERAL CREDIT UNIONS.] The 
        commissioner of commerce may authorize credit union activity in 
        which credit unions subject to the jurisdiction of the federal 
        government may be authorized to engage by federal legislation, 
        ruling, or regulation.  The commissioner may not authorize state 
        credit unions subject to this chapter to engage in credit union 
        activity prohibited by the laws of this state. 
           Sec. 38.  Minnesota Statutes 1996, section 52.062, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REASONS FOR COMMISSIONER'S ACTION.] 
        Whenever the commissioner of commerce shall find that a credit 
        union is engaged in unsafe or unsound practices in conducting 
        its business or that the shares of the members are impaired or 
        are in immediate danger of becoming impaired, or that such 
        credit union has knowingly or negligently permitted any of its 
        officers, directors, committee members, or employees to violate 
        any material provision of any law, bylaw, or rule to which the 
        credit union is subject, the commissioner of commerce may 
        proceed in the manner provided by either subdivision 2 or, 3, or 
        4. 
           Sec. 39.  Minnesota Statutes 1996, section 52.062, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [CONSENT CEASE AND DESIST ORDER.] In lieu of 
        suspension of the operation of the credit union, the 
        commissioner of commerce and the board of directors of the 
        credit union may agree to execute a consent cease and desist 
        order in which the parties agree to waive the right to a hearing 
        and agree that the credit union shall cease and desist from 
        unsafe or unsound practices, or violations.  The order must 
        specify whether credit union operation may continue, and if 
        operation may continue, the conditions under which operation may 
        continue. 
           Sec. 40.  Minnesota Statutes 1996, section 52.063, is 
        amended to read: 
           52.063 [PROCEEDINGS FOLLOWING SUSPENSION OR, CONTINUATION 
        OF SUSPENSION, OR CONSENT CEASE AND DESIST ORDER; APPOINTMENT OF 
        NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] 
           Subdivision 1.  [PROCEEDINGS FOLLOWING SUSPENSION OR 
        CONTINUATION OF SUSPENSION.] Upon receipt of the suspension 
        notice or the notice of the continuation of suspension under 
        section 52.062, subdivision 2 or 3, the credit union shall 
        immediately cease or continue cessation of all operations except 
        those operations specifically authorized by the commissioner of 
        commerce.  If the notice is given pursuant to determination by 
        the commissioner of commerce after a hearing, the board of 
        directors shall have 60 days from the receipt of said notice in 
        which to file with the commissioner of commerce a proposed plan 
        of corrective actions or to request that a receiver be appointed 
        for the credit union.  The commissioner of commerce shall have 
        30 days from the receipt of the proposed plan of corrective 
        actions to determine if the proposed corrective actions are 
        sufficient to correct the deficiencies which formed the basis 
        for the suspension.  If the commissioner of commerce determines 
        that the proposed corrective actions are sufficient, the 
        suspension shall be lifted and the credit union returned to 
        normal operations under its board of directors.  If the 
        commissioner of commerce believes the proposed corrective 
        actions insufficient, or if the board has failed to answer the 
        suspension notice, or has requested that a receiver be 
        appointed, then the commissioner of commerce shall apply to the 
        district court for appointment of a receiver.  The credit union 
        shall have the right, within six months of the receipt of any 
        notice of suspension or continuation of suspension pursuant to a 
        determination by the commissioner of commerce after hearing, to 
        appeal to the district court for a ruling as to the validity of 
        such notice.  
           Subd. 2.  [PROCEEDINGS FOLLOWING CONSENT CEASE AND DESIST 
        ORDER.] If the commissioner of commerce and the board of 
        directors of the credit union execute a consent cease and desist 
        order in lieu of a suspension under section 52.062, subdivision 
        4, the board of directors of the credit union may request that 
        the commissioner of commerce seek court appointment of a 
        receiver for the credit union.  The consent cease and desist 
        order must state that the credit union has requested that the 
        commissioner seek appointment of a receiver. 
           Subd. 3.  [APPOINTMENT OF NATIONAL CREDIT UNION 
        ADMINISTRATION BOARD AS RECEIVER.] Upon a request by the 
        commissioner of commerce, the court may appoint the National 
        Credit Union Administration Board, created by section 3 of the 
        Federal Credit Union Act, as amended, as receiver of a credit 
        union, without bond, when the deposits of the credit union are 
        to any extent insured by the National Credit Union 
        Administration Board, and the credit union has had its 
        operations suspended or has executed a consent cease and desist 
        order with the commissioner in lieu of a suspension under 
        section 52.062.  Notwithstanding any other provisions of law, 
        the commissioner of commerce may, in the event of the suspension 
        or consent cease and desist order, tender to the National Credit 
        Union Administration Board the proposed appointment as receiver 
        of the credit union.  If the National Credit Union 
        Administration Board accepts the proposed appointment and the 
        court appoints the National Credit Union Administration Board as 
        receiver upon a request by the commissioner, the National Credit 
        Union Administration Board shall have and possess all the powers 
        and privileges provided by the laws of this state and section 
        207 of the Federal Credit Union Act, as amended, with respect to 
        a receiver of a credit union, the board of directors of the 
        credit union, and its members. 
           Sec. 41.  Minnesota Statutes 1996, section 52.064, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [WAIVER WHEN CREDIT UNION REQUESTS APPOINTMENT OF 
        NATIONAL CREDIT UNION ADMINISTRATION BOARD AS RECEIVER.] If the 
        board of directors of the credit union has made a request to the 
        commissioner of commerce to seek court appointment of the 
        National Credit Union Administration Board as its receiver, and 
        the commissioner elects to seek this appointment, then the board 
        of directors of the credit union may waive the right to apply to 
        the court for permission to file, and the right to file, a plan 
        of reorganization, merger, or consolidation for the credit union 
        within 90 days of the appointment of the receiver under 
        subdivision 1.  The board of directors of the credit union may 
        waive this right on behalf of itself, and on behalf of the 
        members of the credit union, when the board of directors of the 
        credit union determines that such action is in the best 
        interests of the credit union and its members, so that the 
        deposit insurer may proceed expeditiously to wind up the affairs 
        of the credit union upon appointment as receiver. 
           Sec. 42.  Minnesota Statutes 1996, section 52.13, is 
        amended to read: 
           52.13 [DEPOSITS IN NAME OF MINOR.] 
           Any deposit made in the name of a minor, or shares issued 
        in a minor's name, shall be held for the exclusive right and 
        benefit of the minor, free from the control or lien of all other 
        persons except creditors, and together with the dividends or 
        interest thereon shall be paid to the minor; and the minor's 
        receipt, check, or acquittance in any form shall be a sufficient 
        release and discharge of the depository for the deposits or 
        shares, or any part thereof, until a conservator or guardian 
        appointed for the minor shall have delivered a certificate of 
        appointment to the depository.  Deposits may be accepted 
        pursuant to the authority set forth in chapter 527, provided 
        that either the custodian or the minor is a member of the credit 
        union accepting the deposit. 
           Sec. 43.  Minnesota Statutes 1996, section 52.201, is 
        amended to read: 
           52.201 [REORGANIZING FEDERAL CREDIT UNION INTO STATE CREDIT 
        UNION.] 
           When any federal credit union authorized to convert to a 
        state charter has taken the necessary steps under the federal 
        law for that purpose, seven or more members, upon authority of 
        two-thirds of the members present and entitled to vote and who 
        shall have voted for such conversion at a regular or special 
        meeting upon 14 days mailed written notice to each member at the 
        member's last known address clearly stating that such conversion 
        is to be acted upon, and upon approval of the commissioner of 
        commerce, may execute a certificate of incorporation under the 
        provisions of the state credit union act, which, in addition to 
        the other requirements of law, shall state the authority derived 
        from the shareholders of such federal credit union; and upon 
        recording such certificate as required by law, it shall become a 
        legal state credit union and the members of the federal credit 
        union shall without further action be members of the state 
        credit union.  This includes members of the federal credit union 
        on the basis of acceptance of small employer groups provided the 
        commissioner may require contemporaneous filing of applications 
        under section 52.05, subdivision 2.  Thereupon the assets of the 
        federal credit union, subject to its liabilities not liquidated 
        under the federal law before such incorporation, shall vest in 
        and become the property of such state credit union and the 
        members upon request shall be entitled to a new passbook showing 
        existing share and loan balances.  The commissioner of commerce 
        shall approve or disapprove of the conversion within 60 days of 
        the date the proposal is presented.  
           Sec. 44.  Minnesota Statutes 1996, section 53.04, is 
        amended by adding a subdivision to read: 
           Subd. 5b.  [NEGOTIABLE ORDER OF WITHDRAWAL 
        ACCOUNTS.] Notwithstanding section 53.05, clause (1), and 
        consistent with United States Code, title 12, section 1832, 
        issue negotiable order of withdrawal accounts, which may not be 
        referred to as checking accounts and may include the following 
        transactions: 
           (1) automatic (preauthorized) transfers for the purpose of 
        paying loans at the same institution; 
           (2) transfers or withdrawals made by mail, messenger, 
        automated teller machine, or in person as withdrawals or 
        transfers to another account of the depositor at the same 
        institution; 
           (3) withdrawals initiated by telephone and consummated by 
        an official check mailed to the depository; 
           (4) automated clearinghouse debits; 
           (5) transfers from a customer's account under a 
        preauthorized agreement to cover overdrafts on another 
        transaction account; 
           (6) drafts payable to third parties; and 
           (7) debit card transactions. 
           Agreements establishing negotiable order of withdrawal 
        accounts must include a prominent disclosure of the following: 
           "We reserve the right to at any time require not less than 
        seven days' notice in writing before each withdrawal from this 
        account." 
           A negotiable order of withdrawal account may be with or 
        without interest and is considered a transaction account for 
        purposes of section 48.512. 
           Before exercising this power, the company must submit a 
        plan to the commissioner detailing implementation of the power. 
           Sec. 45.  Minnesota Statutes 1996, section 53.05, is 
        amended to read: 
           53.05 [POWERS, LIMITATION.] 
           No industrial loan and thrift company may do any of the 
        following: 
           (1) carry demand banking accounts; use the word "savings" 
        unless the institution's investment certificates, savings 
        accounts, and savings deposits are insured by the Federal 
        Deposit Insurance Corporation and then only if the word is not 
        followed by the words "and loan" in its corporate name; use the 
        word "bank" or "banking" in its corporate name; operate as a 
        savings bank; 
           (2) have outstanding at any one time certificates of 
        indebtedness, savings accounts, and savings deposits 30 times 
        the sum of capital stock and surplus of the company; 
           (3) accept trusts, except as provided in section 47.75, 
        subdivision 1, or act as guardian, administrator, or judicial 
        trustee in any form; 
           (4) deposit any of its funds in any banking corporation, 
        unless that corporation has been designated by vote of a 
        majority of directors or of the executive committee present at a 
        meeting duly called, at which a quorum was in attendance; 
           (5) change any allocation of capital made pursuant to 
        section 53.03 or reduce or withdraw in any way any portion of 
        the capital stock and surplus without prior written approval of 
        the commissioner of commerce; 
           (6) take any instrument in which blanks are left to be 
        filled in after execution; 
           (7) lend money in excess of 20 percent of the total of its 
        capital stock and surplus at all its authorized locations to a 
        person primarily liable.  Companies not issuing investment 
        certificates of indebtedness under section 53.04 need not comply 
        with the requirement if the amount of money lent does not exceed 
        $100,000 of principal as defined by section 47.59, subdivision 
        1, paragraph (p).  
           However, industrial loan and thrift companies with deposit 
        liabilities must comply with the provisions of section 48.24; or 
           (8) issue cashier's checks pursuant to section 48.151, 
        unless and at all times the aggregate liability to all creditors 
        on these instruments is protected by a special fund in cash or 
        due from banks to be used solely for payment of the cashier's 
        checks. 
           Sec. 46.  Minnesota Statutes 1996, section 53.09, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  [COMPLIANCE EXAMINATIONS.] For the purpose of 
        discovering violations of this chapter or securing information 
        lawfully required by the commissioner under this chapter, the 
        commissioner may, at any time, either personally or by a person 
        or persons duly designated, investigate the loans and business, 
        and examine the books, accounts, records, and files used in the 
        business, of every licensee and of every person engaged in the 
        business whether or not the person acts or claims to act as 
        principal or agent, or under the authority of this chapter.  For 
        the purposes of this subdivision, the commissioner and duly 
        designated representatives have free access to the offices and 
        places of business, books, accounts, papers, records, files, 
        safes, and vaults of all these persons.  The commissioner and 
        all persons duly designated may require the attendance of and 
        examine, under oath, all persons whose testimony the 
        commissioner may require relative to the loans or business or to 
        the subject matter of an examination, investigation, or 
        hearing.  Upon written agreement with the company, the 
        commissioner may conduct examinations applying the procedures 
        for purposes of subdivision 1, and section 46.04, subdivision 1, 
        to facilitate the qualifications of the company to participate 
        in the United States Small Business Administration loan 
        guarantee or similar programs. 
           Each licensee shall pay to the commissioner the amount 
        required under section 46.131, and the commissioner may maintain 
        an action for the recovery of the costs in a court of competent 
        jurisdiction. 
           Sec. 47.  Minnesota Statutes 1996, section 55.06, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PROHIBITION.] No person except a bank, a 
        savings bank, a credit union, a savings association, industrial 
        loan and thrift company issuing investment certificates of 
        indebtedness, or a trust company may let out or rent as lessor, 
        for hire, safe deposit boxes or take or receive valuable 
        personal property for safekeeping and storage, as bailee, for 
        hire, without procuring a license and giving a bond, as required 
        by this chapter, except as otherwise authorized by law so to do. 
           Sec. 48.  Minnesota Statutes 1996, section 56.07, is 
        amended to read: 
           56.07 [CONTROL OVER LOCATION.] 
           Subdivision 1.  [GENERAL.] Not more than one place of 
        business shall be maintained under the same license, but the 
        commissioner may issue more than one license to the same 
        licensee upon compliance with all the provisions of this chapter 
        governing an original issuance of a license, for each such new 
        license.  To the extent that previously filed applicable 
        information remains substantially unchanged, the applicant need 
        not refile this information, unless requested. 
           When a licensee shall wish to change a place of business, 
        the licensee shall give written notice thereof 30 days in 
        advance to the commissioner, who shall within 30 days of receipt 
        of such notice, issue an amended license approving the change.  
        No change in the place of business of a licensee to a location 
        outside of its current trade area or more than 25 miles from its 
        present location, whichever distance is greater, shall be 
        permitted under the same license unless all of the requirements 
        of section 56.04 have been met.  
           A licensed place of business shall be open during regular 
        business hours each weekday, except for legal holidays and for 
        any weekday the commissioner grants approval to the licensee to 
        remain closed.  A licensed place of business may be open on 
        Saturday, but shall be closed on Sunday.  A licensed location 
        must be open for business and examination purposes on a schedule 
        provided to and approved by the commissioner.  This schedule of 
        regular business must be conspicuously posted at the licensed 
        location. 
           Subd. 2.  [INTERACTIVE KIOSK LOCATIONS.] Licensed locations 
        providing limited services on an interactive telephone-customer 
        service communications terminal are required to comply with 
        paragraphs (a) to (c). 
           (a) The licensee must maintain business books, accounts, 
        and records on a suitable alternative system of maintenance 
        approved by the commissioner. 
           (b) The license required to be posted under section 56.05 
        may be displayed on the customer service communications terminal 
        screen for a period of no less than 15 seconds. 
           (c) The full and accurate schedule of charges required by 
        section 56.14, clause (5), may be displayed on the customer 
        service communications terminal screen for no less than 20 
        seconds. 
           Sec. 49.  Minnesota Statutes 1996, section 56.10, 
        subdivision 1, is amended to read: 
           Subdivision 1.  For the purpose of discovering violations 
        of this chapter or securing information lawfully required by the 
        commissioner hereunder, the commissioner may, at any time, 
        either personally or by a person or persons duly designated, 
        investigate the loans and business and examine the books, 
        accounts, records, and files used therein, of every licensee and 
        of every person who shall be engaged in the business described 
        in section 56.01, whether the person shall act or claim to act 
        as principal or agent, or under or without the authority of this 
        chapter.  For that purpose the commissioner and a duly 
        designated representative shall have free access to the offices 
        and places of business, books, accounts, papers, records, files, 
        safes, and vaults of all such persons.  The commissioner and all 
        persons duly designated shall have authority to require the 
        attendance of and to examine, under oath, all persons whomsoever 
        whose testimony the commissioner may require relative to the 
        loan or the business or to the subject matter of any 
        examination, investigation, or hearing.  Upon written agreement 
        with the licensee, the commissioner may conduct examinations 
        applying the procedures for purposes of this subdivision and 
        section 46.04, subdivision 1, to facilitate the qualifications 
        of the licensee to participate in the United States Small 
        Business Administration loan guarantee or similar programs. 
           Each licensee shall pay to the commissioner such amount as 
        may be required under section 46.131, and the commissioner may 
        maintain an action for the recovery of such costs in any court 
        of competent jurisdiction. 
           Sec. 50.  Minnesota Statutes 1996, section 56.131, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [INTEREST RATES AND CHARGES.] (a) On any 
        loan in a principal amount not exceeding $56,000 $100,000 or 15 
        percent of a Minnesota corporate licensee's capital stock and 
        surplus as defined in section 53.015, if greater, a licensee may 
        contract for and receive interest, finance charges, and other 
        charges as provided in section 47.59. 
           (b) Loans may be interest-bearing or precomputed. 
           (c) Notwithstanding section 47.59 to the contrary, to 
        compute time on interest-bearing and precomputed loans, 
        including, but not limited to the calculation of interest, a day 
        is considered 1/30 of a month when calculation is made for a 
        fraction of a calendar month.  A year is 12 calendar months.  A 
        calendar month is that period from a given date in one month to 
        the same numbered date in the following month, and if there is 
        no same numbered date, to the last day of the following month.  
        When a period of time includes a whole month and a fraction of a 
        month, the fraction of a month is considered to follow the whole 
        month.  
           In the alternative, for interest-bearing loans, a licensee 
        may charge interest at the rate of 1/365 of the agreed annual 
        rate for each actual day elapsed.  
           (d) With respect to interest-bearing loans and 
        notwithstanding section 47.59: 
           (1) Interest must be computed on unpaid principal balances 
        outstanding from time to time, for the time outstanding.  Each 
        payment must be applied first to the accumulated interest and 
        the remainder of the payment applied to the unpaid principal 
        balance; provided however, that if the amount of the payment is 
        insufficient to pay the accumulated interest, the unpaid 
        interest continues to accumulate to be paid from the proceeds of 
        subsequent payments and is not added to the principal balance. 
           (2) Interest must not be payable in advance or compounded.  
        However, if part or all of the consideration for a new loan 
        contract is the unpaid principal balance of a prior loan, then 
        the principal amount payable under the new loan contract may 
        include any unpaid interest which has accrued.  The unpaid 
        principal balance of a precomputed loan is the balance due after 
        refund or credit of unearned interest as provided in paragraph 
        (e), clause (3).  The resulting loan contract is deemed a new 
        and separate loan transaction for all purposes. 
           (e) With respect to precomputed loans and notwithstanding 
        section 47.59 to the contrary: 
           (1) Loans must be repayable in substantially equal and 
        consecutive monthly installments of principal and interest 
        combined, except that the first installment period may be more 
        or less than one month by not more than 15 days, and the first 
        installment payment amount may be larger than the remaining 
        payments by the amount of interest charged for the extra days 
        and must be reduced by the amount of interest for the number of 
        days less than one month to the first installment payment; and 
        monthly installment payment dates may be omitted to accommodate 
        borrowers with seasonal income. 
           (2) Payments may be applied to the combined total of 
        principal and precomputed interest until the loan is fully 
        paid.  Payments must be applied in the order in which they 
        become due. 
           (3) If the maturity of the loan is accelerated for any 
        reason and judgment is entered, the licensee shall credit the 
        borrower with the same refund as if prepayment in full had been 
        made on the date the judgment is entered. 
           (4) If two or more installments are delinquent one full 
        month or more on any due date, and if the contract so provides, 
        the licensee may reduce the unpaid balance by the refund credit 
        which would be required for prepayment in full on the due date 
        of the most recent maturing installment in default.  Thereafter, 
        and in lieu of any other default or deferment charges, the 
        single annual percentage rate permitted by this subdivision may 
        be charged on the unpaid balance until fully paid. 
           (5) Following the final installment as originally scheduled 
        or deferred, the licensee, for any loan contract which has not 
        previously been converted to interest-bearing under 
        clause (4) (7), may charge interest on any balance remaining 
        unpaid, including unpaid default or deferment charges, at the 
        single annual percentage rate permitted by this subdivision 
        until fully paid.  
           (6) (5) With respect to a loan secured by an interest in 
        real estate, and having a maturity of more than 60 months, the 
        original schedule of installment payments must fully amortize 
        the principal and interest on the loan.  The original schedule 
        of installment payments for any other loan secured by an 
        interest in real estate must provide for payment amounts that 
        are sufficient to pay all interest scheduled to be due on the 
        loan. 
           (6) A delinquency charge as provided for in section 47.59, 
        subdivision 6, paragraph (a), clause (4). 
           (7) Grant extensions, deferments, or conversions to 
        interest-bearing as provided in section 47.59, subdivision 5. 
           Sec. 51.  Minnesota Statutes 1996, section 56.131, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ADJUSTMENT OF DOLLAR AMOUNTS.] The dollar 
        amounts in this section subdivisions 2 and 6, sections 53.04, 
        subdivision 3a, paragraph (c), 56.01, 56.12, and 56.125 shall 
        change periodically, as provided in section 47.59, subdivision 3.
           Sec. 52.  Minnesota Statutes 1996, section 59A.08, 
        subdivision 3, is amended to read: 
           Subd. 3.  The information required by subdivision 1 shall 
        only be required in the initial insurance premium finance 
        agreement entered into if said agreement is open end.  An 
        insurance premium finance agreement is open end if it provides 
        that additional or subsequent insurance premiums may be financed 
        and added to the initial insurance premium finance agreement 
        from time to time.  
           Additional or subsequent premiums may be added to an open 
        end insurance premium finance agreement from time to time, 
        provided that: 
           (a) The additional or subsequent insurance premium to be 
        added results from additional premiums required under policies 
        presently being financed under the open end insurance premium 
        finance agreement or from a renewal of a policy or from other 
        policies owned or purchased by the insured.  
           (b) The insurance premium finance company receives written 
        notice or advice from an insurer authorized to do business in 
        this state or from an insurance agent licensed in this state 
        acknowledging that the premium on an existing financed policy 
        has been increased or that a policy has been renewed or that 
        additional policies have or will be issued to the insured.  The 
        notice or advice shall contain the amount of the additional 
        premium, the down payment collected by the insurer or agent, if 
        any, and the amount of premium to be added to the open end 
        insurance premium finance agreement.  
           (c) If the additional premiums to be added to the open end 
        insurance premium finance agreement result from additional 
        premiums required on policies presently financed under the 
        agreement which are to be financed beyond the scheduled maturity 
        of the original financing, the renewal of a policy or from an 
        additional policy owned or purchased by the insured, the 
        insurance premium finance company shall mail a notice to the 
        insured at the address shown in the policy.  Said notice shall 
        contain: 
           (1) The information required by subdivision 1, 
        notwithstanding that the notice is not signed by, nor on behalf 
        of the insured; 
           (2) A conspicuous statement to the insured stating that the 
        insured may tender the premiums in full or disaffirm the 
        financing of the premium on the renewal or additional policies 
        by mailing to the insurance premium finance company notice of 
        intention to do so within ten days after the insurance premium 
        finance company mails to the insured the notice required by this 
        subdivision; 
           (3) A conspicuous statement to the insured that the 
        insurance premium finance company may, in event of default in 
        payment of the additional premium, or any installment thereof, 
        cause the insured's insurance contract or contracts to be 
        canceled as provided in section 59A.11.  
           (d) At the time the notice of additional premium to be 
        added to the open end insurance premium finance agreement is 
        mailed to the insured as provided in clause (c), an employee of 
        the insurance premium finance company shall prepare and sign a 
        certificate or affidavit of mailing setting forth the following: 
           (1) The name of the employee who mailed the notice of the 
        additional premium to be financed.  
           (2) That the employee mailing the notice is over 18 years 
        of age.  
           (3) The date and place of the deposit of the notice in the 
        mail.  
           (4) The name and address of the person to whom the notice 
        was mailed as shown on the envelope containing the notice.  
           (5) That the envelope containing the notice was sealed and 
        deposited in the mail with the proper postage thereon.  
           A certificate or affidavit of mailing, prepared and signed 
        as prescribed in this subdivision shall raise rebuttable 
        presumption that the notice was mailed to the insured at the 
        address shown in the certificate or affidavit of mailing.  
           (e) The insurance premium finance company may make a 
        finance charge in accordance with section 59A.09 for additional 
        premiums financed and added to an open end insurance premium 
        finance agreement; however, only one flat rate service fee may 
        be made or charged for each insurance premium finance agreement 
        entered into and no additional flat service fee may be made or 
        charged for adding additional or subsequent premiums to an open 
        end insurance premium finance agreement for which a flat service 
        fee was previously made or charged. or from a renewal of a 
        policy or from other policies owned or purchased by the insured, 
        a written notice must be mailed, faxed, or delivered to the 
        insured outlining any changes to the information required by 
        subdivision 1 along with a conspicuous statement to the insured 
        that the insured may tender the premiums in full or affirm the 
        proposed changes by tendering either an additional down payment 
        or tendering the proposed revised installment amount, or 
        disaffirm the financing of the additional premium by continuing 
        the original payment amount as agreed to in the initial 
        agreement.  
           If the proposed revisions in paragraph (c) are affirmed by 
        the insured, the finance company may make an additional finance 
        charge according to section 59A.09 for the additional premium 
        financed and added to the open-end agreement; however, no 
        additional flat service fee may be made or charged for adding 
        additional or subsequent premiums to an open-end insurance 
        premium finance agreement for which a flat service fee was 
        previously made or charged. 
           Sec. 53.  Minnesota Statutes 1996, section 59A.08, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [COMPETITIVE EQUALITY.] No insurance agent, 
        insurance broker, or insurer may require a person to use a 
        particular insurance premium finance company or other 
        installment payment plan for which a finance charge or other fee 
        in connection with an installment payment has been or will be 
        imposed or refuse to accept premium payment from a company 
        licensed under sections 59A.01 to 59A.15. 
           Sec. 54.  Minnesota Statutes 1996, section 59A.11, 
        subdivision 2, is amended to read: 
           Subd. 2.  Not less than ten days' written notice shall be 
        mailed to the insured setting forth the intent of the insurance 
        premium finance company to cancel the insurance contract unless 
        the default is cured prior to the date stated in the notice.  
        The insurance agent or insurance broker indicated on the premium 
        finance agreement shall also be mailed given ten days' notice of 
        this action in a manner agreed upon between the insurance 
        premium finance company and insurance agent or insurance broker. 
           Sec. 55.  Minnesota Statutes 1996, section 59A.11, 
        subdivision 3, is amended to read: 
           Subd. 3.  (a) Pursuant to the power of attorney or other 
        authority referred to above, the insurance premium finance 
        company may cancel on behalf of the insured by mailing to the 
        insurer written notice stating when thereafter the cancellation 
        shall be effective, and the insurance contract shall be canceled 
        as if such notice of cancellation had been submitted by the 
        insured personally, but without requiring the return of the 
        insurance contract.  In the event that the insurer or its agent 
        does not provide the insurance premium finance company with a 
        specific mailing address for the purposes of receipt of the 
        above notice, then mailing by the insurance premium finance 
        company to the insurer at the address which is on file and of 
        record with the commissioner of commerce pursuant to the 
        provisions of chapters 60A and 72A shall be considered 
        sufficient notice under this section.  The notice requirements 
        of this paragraph only apply if an insurance premium finance 
        company and an insurer have not agreed on a method of providing 
        notice of cancellation. 
           (b) The insurance premium finance company shall also mail a 
        notice of cancellation to the insured at the insured's last 
        known address and.  
           (c) Written notice of the cancellation must also be given 
        to the insurance agent or insurance broker indicated on the 
        premium finance agreement.  Written notice to the insurance 
        agent or broker required by this paragraph may be given in a 
        manner agreed upon between the insurance premium finance 
        company, insurer, agent, or broker.  
           Sec. 56.  Minnesota Statutes 1996, section 62B.04, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CREDIT LIFE INSURANCE.] (1) The initial 
        amount of credit life insurance shall not exceed the amount of 
        principal repayable under the contract of indebtedness plus an 
        amount equal to one monthly payment.  Thereafter, if the 
        indebtedness is repayable in substantially equal installments 
        according to a predetermined schedule, the amount of insurance 
        on which the premium is calculated shall be equal to not exceed 
        the scheduled indebtedness plus one monthly payment or actual 
        amount of indebtedness, whichever is greater.  If the contract 
        of indebtedness provides for a variable rate of finance charge 
        or interest, the initial rate or the scheduled rates based on 
        the initial index must be used in determining the scheduled 
        amount of indebtedness and subsequent changes to the rate must 
        be disregarded in determining whether the contract is repayable 
        in substantially equal installments according to a predetermined 
        schedule. 
           (2) Notwithstanding clause (1), the amount of credit life 
        insurance written in connection with credit transactions 
        repayable over a specified term exceeding 63 months shall not 
        exceed the greater of:  (i) the actual amount of unpaid 
        indebtedness as it exists from time to time; or (ii) where an 
        indebtedness is repayable in substantially equal installments 
        according to a predetermined schedule, the scheduled amount of 
        unpaid indebtedness, less any unearned interest or finance 
        charges, plus an amount equal to two monthly payments.  If the 
        credit transaction provides for a variable rate of finance 
        charge or interest, the initial rate or the scheduled rates 
        based on the initial index must be used in determining the 
        scheduled amount of unpaid indebtedness and subsequent changes 
        in the rate must be disregarded in determining whether the 
        contract is repayable in substantially equal installments 
        according to a predetermined schedule. 
           (3) Notwithstanding clauses (1) and (2), insurance on 
        educational, agricultural, and horticultural credit transaction 
        commitments may be written on a nondecreasing or level term plan 
        for the amount of the loan commitment. 
           (4) If the contract of indebtedness provides for a variable 
        rate of finance charge or interest, the initial rate or the 
        scheduled rates based on the initial index shall be used in 
        determining the scheduled amount of indebtedness, and subsequent 
        changes to the rate shall be disregarded in determining whether 
        the contract is repayable in substantially equal installments 
        according to a predetermined schedule. 
           Sec. 57.  Minnesota Statutes 1996, section 300.20, 
        subdivision 2, is amended to read: 
           Subd. 2.  [VACANCIES.] If the certificate of incorporation 
        or the bylaws so provides, a vacancy in the board of directors 
        may be filled by the remaining directors.  Not more than 
        one-third of the members of the board may be so filled in any 
        one year except any number may be appointed to provide for at 
        least three five directors until any subsequent meeting of the 
        stockholders.  
           Sec. 58.  Minnesota Statutes 1996, section 303.02, 
        subdivision 4, is amended to read: 
           Subd. 4.  [FOREIGN CORPORATION.] "Foreign corporation" does 
        not include any corporation which, under the constitution and 
        statutes of the United States, may transact business in this 
        state without first obtaining a certificate of authority so to 
        do, insurance companies as defined by section 60A.02, and any 
        banking or trust association or corporation or national banking 
        association acting in this state as an executor, administrator, 
        trustee, or guardian, or conservator under section 303.25.  
           Sec. 59.  Minnesota Statutes 1996, section 303.25, 
        subdivision 5, is amended to read: 
           Subd. 5.  [SOLICITATION OF BUSINESS.] A foreign trust 
        association may not maintain an office within this state, but it 
        may solicit business within this state if banking or trust 
        associations or corporations organized under the laws of this 
        state or national banking associations maintaining their 
        principal offices in this state may solicit business in the 
        state in which the foreign trust association maintains its 
        principal office.  For purposes of this subdivision, 
        solicitation of business includes the activities authorized for 
        state or national banking associations exercising fiduciary 
        powers maintaining their principal offices in this state 
        considered a representative trust office established under 
        section 48.476. 
           Sec. 60.  Minnesota Statutes 1996, section 325F.68, 
        subdivision 2, is amended to read: 
           Subd. 2.  "Merchandise" means any objects, wares, goods, 
        commodities, intangibles, real estate, loans, or services.  
           Sec. 61.  Minnesota Statutes 1996, section 332.21, is 
        amended to read: 
           332.21 [CONTRACTS.] 
           (a) Each contract entered into by the licensee and the 
        debtor shall be in writing and signed by both parties.  The 
        licensee shall furnish the debtor with a copy of the signed 
        contract.  Each such contract shall set forth: 
           (1) the dollar charges agreed upon for the services of the 
        licensee, clearly disclosing to such debtor the total amount 
        which may be retained by licensee for services if the contract 
        is fully performed, which maximum amount would be the 
        origination fee together with 15 percent of the amount scheduled 
        to be liquidated by such contract,.  This disclosure must state 
        that if the amount of debt owed is increased by interest, late 
        fees, over the limit fees, and other amounts imposed by the 
        creditor or by reason of the events under paragraph (c), the 
        length of the contract would be extended and remain in force and 
        that the total dollar charges agreed upon may increase at the 
        rate agreed upon in the original contract; 
           (2) the terms upon which the debtor may cancel the contract 
        as set out in section 332.23,; 
           (3) all debts which are to be managed by the licensee, 
        including the name of the creditor and the amount of the debt,; 
        and 
           (4) such other matter as the commissioner may require by 
        rule.  
           (b) A contract shall not be effective until a payment has 
        been made to the licensee for distribution to creditors or until 
        three business days after the signing thereof, whichever is 
        later.  Within such period an individual may disaffirm said 
        contract and upon such disaffirmance said contract shall be null 
        and void.  
           (c) Total fees contained in the contract may be exceeded in 
        relation to creditors under open-end agreements if it is agreed 
        to in the contract and the additional debts so contracted to be 
        prorated do not exceed ten percent of the original debts in the 
        contract or written revisions to the original contract. 
           Sec. 62.  Minnesota Statutes 1996, section 332.23, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ORIGINATION FEE, CREDIT BACKGROUND REPORT 
        COST.] The licensee may charge an origination fee of not more 
        than $25 and collect from the debtor the actual cost of a credit 
        background report obtained from a credit reporting agency not 
        related to or affiliated with the licensee or if affiliated, the 
        total cost of the report may not exceed $8.  The costs to the 
        debtor of said origination fee and credit background report may 
        be made from the originating amount paid by the debtor to the 
        licensee.  The cost of only one credit background report may be 
        collected from the debtor in any 12-month period. 
           Sec. 63.  Minnesota Statutes 1996, section 332.23, 
        subdivision 2, is amended to read: 
           Subd. 2.  [WITHDRAWAL OF FEE.] The licensee may withdraw 
        and retain as partial payment of the licensee's total fee not 
        more than 15 percent of any sum deposited with the licensee by 
        the debtor for distribution.  The remaining 85 percent must be 
        disbursed to listed creditors pursuant to and in accordance with 
        the contract between the debtor and the licensee within 35 days 
        after receipt unless the reasonable payment of one or more of 
        the debtor's obligations requires that the funds be held for a 
        longer period so as to accumulate a sum certain or where the 
        debtor's payment is returned for nonsufficient funds, then no 
        longer than 42 days.  Total payment to licensee for services 
        rendered, excluding the origination fee and any credit 
        background report, shall not exceed 15 percent of funds 
        deposited with licensee by debtor for distribution. 
           Sec. 64.  Minnesota Statutes 1996, section 332.23, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ADVANCE PAYMENTS.] Notwithstanding anything 
        herein to the contrary no fees or charges shall be received or 
        retained for any payments by the debtor made more than the 
        following number of days in advance of the date specified in the 
        contract on which they are due:  (a) 30 42 days in the case of 
        contracts requiring monthly payments; (b) 15 days in the case of 
        contracts requiring biweekly payments; or (c) seven days in the 
        case of contracts requiring weekly payments.  For those 
        contracts which do not require payments in specified amounts, a 
        payment shall be deemed an advance payment to the extent it 
        exceeds twice the average regular payment theretofore made by 
        the debtor pursuant to that contract.  This subdivision shall 
        not apply when it is the intention of the debtor to use such 
        advance payments to satisfy future payment of obligations due 
        within 30 days under the contract. 
           Sec. 65.  Minnesota Statutes 1996, section 332.50, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] "Check" means a check, 
        draft, order of withdrawal, or similar negotiable or 
        nonnegotiable instrument.  
           "Credit" means an arrangement or understanding with the 
        drawee for the payment of the check. 
           "Dishonor" has the meaning given in section 336.3-502, but 
        does not include dishonor due to a stop payment order requested 
        by an issuer who has a good faith defense to payment on the 
        check.  "Dishonor" does include a stop payment order requested 
        by an issuer if the account did not have sufficient funds for 
        payment of the check at the time of presentment, except for stop 
        payment orders on a check found to be stolen.  
           Sec. 66.  Minnesota Statutes 1996, section 332.50, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ACTS CONSTITUTING.] (a) Whoever issues any check 
        that is dishonored and is not paid within 30 days after mailing 
        a notice of dishonor that includes a citation to this section 
        and section 609.535, and a description of the penalties 
        contained in these sections, in compliance with subdivision 3, 
        is liable to the payee, holder, or agent of the holder for the 
        following penalties:  (1) the amount of the check plus a civil 
        penalty of up to $100 or up to 100 percent of the value of the 
        check, whichever is greater; (2) interest at the rate payable on 
        judgments pursuant to section 549.09 on the face amount of the 
        check from the date of dishonor; and (3) reasonable attorney 
        fees if the aggregate amount of dishonored checks issued by the 
        issuer to all payees within a six-month period is over $1,250. 
           (b) If the amount of the dishonored check plus any service 
        charges that have been incurred under paragraph (d) or (e) have 
        not been paid within 30 days after having mailed a notice of 
        dishonor in compliance with subdivision 3 but before bringing an 
        action, a payee, holder, or agent of the holder may make a 
        written demand for payment for the liability imposed by 
        paragraph (a) by sending a copy of this section and a 
        description of the liability contained in this section to the 
        issuer's last known address. 
           (c) After notice has been sent but before an action under 
        this section is heard by the court, the plaintiff shall settle 
        the claim if the defendant gives the plaintiff the amount of the 
        check plus court costs, any service charge owed under paragraph 
        (d), and reasonable attorney fees if provided for under 
        paragraph (a), clause (3).  
           (d) A service charge may be imposed immediately on any 
        dishonored check, regardless of mailing a notice of dishonor, if 
        written notice of the service charge was conspicuously displayed 
        on the premises when the check was issued.  The service charge 
        may not exceed $20, except that if the payee uses the services 
        of a law enforcement agency to obtain payment of a dishonored 
        check, a service charge of up to $25 may be imposed if the 
        service charge is used to reimburse the law enforcement agency 
        for its expenses.  A payee may impose only one service charge 
        under this paragraph for each dishonored check.  
           (e) This subdivision prevails over any provision of law 
        limiting, prohibiting, or otherwise regulating service charges 
        authorized by this subdivision, but does not nullify charges for 
        dishonored checks, which do not exceed the charges in paragraph 
        (d) or the actual cost of collection, but in no case more than 
        $30, or terms or conditions for imposing the charges which have 
        been agreed to by the parties to an express contract. 
           (a) A service charge of up to $20, or actual costs of 
        collection not to exceed $30, may be imposed immediately on any 
        dishonored check, regardless of mailing a notice of dishonor, if 
        notice of the service charge was conspicuously displayed on the 
        premises when the check was issued.  If a law enforcement agency 
        obtains payment of a dishonored check, a service charge not to 
        exceed $25 may be imposed if the service charge is retained by 
        the law enforcement agency for its expenses.  Only one service 
        charge may be imposed under this paragraph for each dishonored 
        check. 
           (b) If the amount of the dishonored check is not paid 
        within 30 days after the payee or holder has mailed notice of 
        dishonor pursuant to section 609.535 and a description of the 
        penalties contained in this subdivision, whoever issued the 
        dishonored check is liable to the payee or holder of the check 
        for: 
           (1) the amount of the check, the service charge as provided 
        in paragraph (a), plus a civil penalty of up to $100 or the 
        value of the check, whichever is greater.  The civil penalty may 
        not be imposed until 30 days following the mailing of the notice 
        of dishonor.  A payee or holder of the check may make a written 
        demand for payment of the civil liability by sending a copy of 
        this section and a description of the liability contained in 
        this section to the issuer's last known address.  Notice as 
        provided in paragraph (a) must also include notification that 
        additional civil penalties will be imposed for dishonored checks 
        for nonpayment after 30 days; 
           (2) interest at the rate payable on judgments pursuant to 
        section 549.09 on the face amount of the check from the date of 
        dishonor; and 
           (3) reasonable attorney fees if the aggregate amount of 
        dishonored checks issued by the issuer to all payees within a 
        six-month period is over $1,250. 
           (c) This subdivision prevails over any provision of law 
        limiting, prohibiting, or otherwise regulating service charges 
        authorized by this subdivision, but does not nullify charges for 
        dishonored checks, which do not exceed the charges in paragraph 
        (a) or terms or conditions for imposing the charges which have 
        been agreed to by the parties in an express contract. 
           (d) A sight draft may not be used as a means of collecting 
        the civil penalties provided in this section without prior 
        consent of the issuer. 
           Sec. 67.  Laws 1996, chapter 414, article 1, section 45, is 
        amended to read: 
           Sec. 45.  [EFFECTIVE DATE.] 
           Sections 1 to 5, 7 to 9, 11, 12, 16, 20 to 27, 30, 33, 35, 
        42, 43, and 44, paragraphs (b) and (c), are effective the day 
        following final enactment.  Section 44, paragraph (a), is 
        effective July 1, 1998 1999. 
           Sections 10, 14, 15, 19, and 36 are effective on the 
        effective date of the repeals in section 44, paragraph (a). 
           Sec. 68.  [TOWN OF HASSAN; DETACHED BANKING FACILITY.] 
           With the prior approval of the commissioner of commerce, a 
        bank operating its main banking office within six miles of the 
        town of Hassan may establish and maintain not more than one 
        detached facility in the town of Hassan.  A bank desiring to 
        establish a detached facility must follow the approval procedure 
        prescribed in Minnesota Statutes, section 47.54.  The 
        establishment of a detached facility according to this section 
        is subject to the provisions of Minnesota Statutes, sections 
        47.51 to 47.57, except to the extent those sections are 
        inconsistent with this section. 
           Sec. 69.  [TOWN OF THOMSON; DETACHED BANKING FACILITY.] 
           With the prior approval of the commissioner of commerce, a 
        bank operating its main office within 20 miles of the town of 
        Thomson may establish and maintain not more than one detached 
        facility in the town of Thomson.  A bank desiring to establish a 
        detached facility must follow the approval procedure prescribed 
        in Minnesota Statutes, section 47.54.  The establishment of a 
        detached facility pursuant to this section is subject to the 
        provisions of Minnesota Statutes, sections 47.51 to 47.57, 
        except to the extent those sections are inconsistent with this 
        section. 
           Sec. 70.  [TRANSACTION ACCOUNT CUSTOMER INFORMATION; 
        INFORMAL WORKING GROUP.] 
           The commissioner of commerce shall select and convene an 
        informal working group to make recommendation to financial 
        intermediaries for notices to transaction account customers 
        regarding: 
           (1) risks and effects of account closing due to misuse by 
        customers as a means to enforce the deterrence objectives of 
        Minnesota Statutes, section 48.512, subdivision 7; 
           (2) risks related to providing account identification to 
        third parties for purposes of or resulting in their issuance of 
        sight drafts; and 
           (3) informing the customers of the privacy terms related to 
        the financial intermediaries' use of customer information. 
        The informal working group must include persons representing 
        financial intermediaries, transaction account clearing 
        organizations, retailers, and consumers.  The commissioner shall 
        accept recommendations from the working group for distribution 
        to financial intermediaries to effect voluntary implementation 
        of transaction account customer information notices prior to 
        September 1, 1997. 
           Sec. 71.  [SCHOOL BANK PILOT PROJECT.] 
           (a) A school bank sponsored by independent school district 
        No. 31, Bemidji, that meets all requirements of paragraph (b) is 
        not subject to Minnesota Statutes, section 47.03, subdivision 1, 
        or to any other statute or rule that regulates banks, other 
        financial institutions, or currency exchanges. 
           (b) To qualify under paragraph (a), the school bank must: 
           (1) be operated as part of a high school educational 
        program and under guidelines adopted by the school board; 
           (2) be advised on a regular basis by a state-chartered or 
        federally-chartered financial institution, but not owned or 
        operated by that financial institution; 
           (3) be located on school premises and have as customers 
        only students enrolled in, or employees of, the school in which 
        it is located; and 
           (4) have a written commitment from the school board, 
        guaranteeing reimbursement of any depositor's funds lost due to 
        insolvency of the school bank. 
           (c) Funds of a school bank that meets the requirements of 
        this section are not school district or other public funds for 
        purposes of any state law governing the use or investment of 
        school district or other public funds. 
           (d) The school district shall annually file with the 
        commissioner of commerce a report, prepared by the students and 
        teachers involved, summarizing the operation of the school bank. 
           (e) This section expires June 30, 2000.  The commissioner 
        of commerce shall, no later than December 15, 1999, provide a 
        written report to the legislature regarding this pilot project 
        and any recommended legislation regarding school banks. 
           Sec. 72.  [REPEALER.] 
           Minnesota Statutes 1996, sections 13.99, subdivision 13; 
        47.29; 47.31; 47.32; 49.47; 49.48; 50.03; 50.23; and 59A.14, are 
        repealed. 
           Sec. 73.  [EFFECTIVE DATE; APPLICABILITY.] 
           Sections 1, 4 to 6, 8, 10, 11, 17, 19 to 25, 28 to 31, 33 
        to 56, 59, 61, 63, 64, 71, and 72 are effective the day 
        following final enactment.  
           Section 68 takes effect the day after compliance by the 
        town board of the town of Hassan with Minnesota Statutes, 
        section 645.021, subdivision 3. 
           Section 69 takes effect the day after compliance by the 
        town board of the town of Thomson with Minnesota Statutes, 
        section 645.021, subdivision 3. 
           Section 70 is effective June 1, 1997. 
           Presented to the governor May 15, 1997 
           Signed by the governor May 16, 1997, 2:15 p.m.

700 State Office Building, 100 Rev. Dr. Martin Luther King Jr. Blvd., St. Paul, MN 55155 ♦ Phone: (651) 296-2868 ♦ TTY: 1-800-627-3529 ♦ Fax: (651) 296-0569