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1995 Minnesota Session Laws

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                            CHAPTER 202-S.F.No. 1134 
                  An act relating to financial institutions; regulating 
                  notices, electronic financial terminals, mergers with 
                  subsidiaries, the powers and duties of the 
                  commissioner of commerce, reporting and records 
                  requirements, lending powers, the powers and duties of 
                  institutions, detached facilities, and interstate 
                  banking; making technical changes; amending Minnesota 
                  Statutes 1994, sections 46.04, subdivision 1, and by 
                  adding a subdivision; 46.041, subdivision 4; 46.046, 
                  subdivision 1; 46.048, subdivision 1, and by adding 
                  subdivisions; 47.10, subdivision 3; 47.11; 47.20, 
                  subdivisions 5 and 10; 47.28, subdivision 1; 47.52; 
                  47.56; 47.58, subdivision 2; 47.61, subdivision 3; 
                  47.62, subdivisions 2, 3, and by adding subdivisions; 
                  47.67; 47.69, subdivisions 3 and 5; 47.78; 48.16; 
                  48.194; 48.24, subdivision 5; 48.475, subdivision 3; 
                  48.48, subdivisions 1 and 2; 48.49; 48.61, subdivision 
                  7, and by adding a subdivision; 48.65; 48.90, 
                  subdivision 1; 48.91; 48.92, subdivisions 1, 2, 6, 7, 
                  8, 9, and by adding a subdivision; 48.93, subdivisions 
                  1, 3, and 4; 48.96; 48.99, subdivision 1; 49.01, 
                  subdivision 3; 51A.02, subdivisions 6, 26, and 40; 
                  51A.19, subdivision 9; 51A.50; 51A.58; 52.04, 
                  subdivision 2a; 52.05, subdivision 2; 53.015, 
                  subdivision 4; 53.04, subdivisions 3a, 3c, 4a, and 5a; 
                  53.09, subdivisions 1, 2, and by adding a subdivision; 
                  56.11; 56.12; 56.125, subdivisions 1, 2, and 3; 
                  56.131, subdivisions 1, 2, 4, and 6; 56.132; 56.14; 
                  56.155, subdivision 1; 56.17; 59A.06, subdivision 2; 
                  62B.04, subdivision 1; 62B.08, subdivision 2; 300.20, 
                  subdivision 1; 327B.04, subdivision 1; 327B.09, 
                  subdivision 1; 332.23, subdivisions 1 and 2; and 
                  334.011, by adding a subdivision; proposing coding for 
                  new law in Minnesota Statutes, chapters 45; 47; 48; 
                  51A; 52; and 334; repealing Minnesota Statutes 1994, 
                  sections 46.03; 47.80; 47.81; 47.82; 47.83; 47.84; 
                  47.85; 47.95; 47.98; 48.1585; 48.512, subdivision 6; 
                  48.611; 48.97; 48.991; 51A.385; and 325F.91, 
                  subdivision 2. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                  FINANCIAL INSTITUTIONS TECHNICAL CORRECTIONS 
           Section 1.  [45.014] [SEAL OF DEPARTMENT OF COMMERCE.] 
           The commissioner of commerce shall devise a seal for 
        official use as the seal of the department of commerce.  The 
        seal must be capable of being legibly reproduced under 
        photographic methods.  A description of the seal, and a copy of 
        it, must be filed in the office of the secretary of state. 
           Sec. 2.  Minnesota Statutes 1994, section 46.04, 
        subdivision 1, is amended to read: 
           Subdivision 1.  The commissioner of commerce, referred to 
        in chapters 46 to 59 59A, and sections 332.12 to 332.29, as the 
        commissioner, is vested with all the powers, authority, and 
        privileges which, prior to the enactment of Laws 1909, chapter 
        201, were conferred by law upon the public examiner, and shall 
        take over all duties in relation to state banks, savings banks, 
        trust companies, savings associations, and other financial 
        institutions within the state which, prior to the enactment of 
        chapter 201, were imposed upon the public examiner.  The 
        commissioner of commerce shall exercise a constant supervision, 
        either personally or through the examiners herein provided for, 
        over the books and affairs of all state banks, savings banks, 
        trust companies, savings associations, credit unions, industrial 
        loan and thrift companies, and other financial institutions 
        doing business within this state; and shall, through examiners, 
        examine each financial institution at least once every 18 
        calendar months.  In satisfying this examination requirement, 
        the commissioner may accept reports of examination prepared by a 
        federal agency having comparable supervisory powers and 
        examination procedures.  With the exception of industrial loan 
        and thrift companies which do not have deposit liabilities and 
        licensed regulated lenders, it shall be the principal purpose of 
        these examinations to inspect and verify the assets and 
        liabilities of each and so far investigate the character and 
        value of the assets of each institution as to determine with 
        reasonable certainty that the values are correctly carried on 
        its books.  Assets and liabilities shall be verified in 
        accordance with methods of procedure which the commissioner may 
        determine to be adequate to carry out the intentions of this 
        section.  It shall be the further purpose of these examinations 
        to assess the adequacy of capital protection and the capacity of 
        the institution to meet usual and reasonably anticipated deposit 
        withdrawals and other cash commitments without resorting to 
        excessive borrowing or sale of assets at a significant loss, and 
        to investigate each institution's compliance with applicable 
        laws and rules.  Based on the examination findings, the 
        commissioner shall make a determination as to whether the 
        institution is being operated in a safe and sound manner.  None 
        of the above provisions limits the commissioner in making 
        additional examinations as deemed necessary or advisable.  The 
        commissioner shall investigate the methods of operation and 
        conduct of these institutions and their systems of accounting, 
        to ascertain whether these methods and systems are in accordance 
        with law and sound banking principles.  The commissioner may 
        make requirements as to records as deemed necessary to 
        facilitate the carrying out of the commissioner's duties and to 
        properly protect the public interest.  The commissioner may 
        examine, or cause to be examined by these examiners, on oath, 
        any officer, director, trustee, owner, agent, clerk, customer, 
        or depositor of any financial institution touching the affairs 
        and business thereof, and may issue, or cause to be issued by 
        the examiners, subpoenas, and administer, or cause to be 
        administered by the examiners, oaths.  In case of any refusal to 
        obey any subpoena issued under the commissioner's direction, the 
        refusal may at once be reported to the district court of the 
        district in which the bank or other financial institution is 
        located, and this court shall enforce obedience to these 
        subpoenas in the manner provided by law for enforcing obedience 
        to subpoenas of the court.  In all matters relating to official 
        duties, the commissioner of commerce has the power possessed by 
        courts of law to issue subpoenas and cause them to be served and 
        enforced, and all officers, directors, trustees, and employees 
        of state banks, savings banks, trust companies, savings 
        associations, and other financial institutions within the state, 
        and all persons having dealings with or knowledge of the affairs 
        or methods of these institutions, shall afford reasonable 
        facilities for these examinations, make returns and reports to 
        the commissioner of commerce as the commissioner may require; 
        attend and answer, under oath, the commissioner's lawful 
        inquiries; produce and exhibit any books, accounts, documents, 
        and property as the commissioner may desire to inspect, and in 
        all things aid the commissioner in the performance of duties.  
           Sec. 3.  Minnesota Statutes 1994, section 46.041, 
        subdivision 4, is amended to read: 
           Subd. 4.  [HEARING.] In any case in which the commissioner 
        grants a request for a hearing or makes the independent 
        determination that a hearing is warranted on the basis of the 
        conditions in subdivision 3, the commissioner shall fix a time 
        for a hearing conducted pursuant to chapter 14 to decide whether 
        or not the application will be granted.  A notice of the hearing 
        must be published by the applicant in the form prescribed by the 
        commissioner in a newspaper published in the municipality in 
        which the proposed bank is to be located, and if there is no 
        such newspaper, then at the county seat of the county in a 
        qualified newspaper likely to give notice in the municipality in 
        which the bank is proposed to be located.  The notice must be 
        published once, at the expense of the applicants, not less than 
        30 days prior to the date of the hearing.  At the hearing the 
        commissioner shall consider the application and hear the 
        applicants and witnesses that appear in favor of or against the 
        granting of the application of the proposed bank.  If an 
        application is contested, 50 percent of an additional fee equal 
        to the actual costs incurred by the department of commerce in 
        approving or disapproving the application, payable to the 
        department of commerce to be deposited in the general fund, must 
        be paid by the applicant and 50 percent equally by the 
        intervening parties. 
           Sec. 4.  Minnesota Statutes 1994, section 46.046, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [WORDS, TERMS, AND PHRASES.] Unless the 
        language or context clearly indicates that a different meaning 
        is intended, the word defined in subdivision 2, for the purposes 
        of sections 46.041 to 46.044, shall be given the meaning 
        subjoined to it; and the word defined in subdivision 3, for the 
        purposes of chapters 46 to 77 83, shall be given the meaning 
        subjoined to it.  
           Sec. 5.  Minnesota Statutes 1994, section 47.11, is amended 
        to read: 
           47.11 [SELECTION OF NAME.] 
           Before execution of the certificate of incorporation of any 
        such corporation or conduct of business under an assumed name, 
        its proposed name or proposed assumed name shall be submitted to 
        the commissioner of commerce, who shall compare it with those of 
        corporations operating in the state, and if it is likely to be 
        mistaken for any of them, or to confuse the public as to the 
        character of its business, or is otherwise objectionable, 
        additional names shall be submitted until a satisfactory one is 
        selected, whereupon the commissioner shall issue a certificate 
        of approval thereof.  
           Sec. 6.  Minnesota Statutes 1994, section 47.28, 
        subdivision 1, is amended to read: 
           Subdivision 1.  Any savings bank organized and existing 
        under and by virtue of the law of this state may amend its 
        articles of incorporation so as to convert itself into a 
        savings, building and loan association, by complying with the 
        following requirements and procedure: 
           The savings bank by a two-thirds vote of the entire board 
        of trustees, at any regular or special meeting of said board 
        duly called for that purpose, shall (a) pass a resolution 
        declaring their intention to convert the savings bank into a 
        savings, building and loan association, and (b) cause an 
        application in writing to be executed, by such persons as the 
        trustees may direct, in the form prescribed by the department of 
        commerce, requesting a certificate of authorization (charter) as 
        a savings, building and loan association to transact business at 
        the place and in the name stated in the application.  The 
        amendments proposed to the articles of incorporation and bylaws 
        shall be included as part of the application.  
           The application shall be submitted to, considered and acted 
        upon by the department of commerce in the same manner and by the 
        same standards as applications are submitted, considered and 
        acted upon under section 51.08 chapter 51A. 
           Sec. 7.  Minnesota Statutes 1994, section 47.58, 
        subdivision 2, is amended to read: 
           Subd. 2.  [AUTHORIZATION.] Pursuant to rules which the 
        commissioner of commerce or commissioner of insurance may find 
        to be necessary and proper, if any, and subject to federal laws 
        and regulations, lenders may make investments in reverse 
        mortgage loans and purchases of obligations representing reverse 
        mortgage loans, provided the aggregate total of committed 
        principal of the investment in reverse mortgage loans by any 
        bank, savings bank, or savings and loan association, does not 
        exceed five percent of that lender's total deposits and savings 
        accounts.  This limitation shall be determined at each June 30 
        and December 31 for the following six-month period.  Any decline 
        in the total of deposits and savings accounts subsequent to a 
        determination may be disregarded.  Security for loans made under 
        this section shall be a first lien on residential property (a) 
        which the borrower occupies as principal residence and which 
        qualifies for homestead classification pursuant to section 
        273.13, and (b) to which the borrower alone has title.  
           Sec. 8.  Minnesota Statutes 1994, section 47.62, 
        subdivision 3, is amended to read: 
           Subd. 3.  Application for authorization shall be made in 
        the manner prescribed by rule.  The commissioner shall grant 
        authorization for the establishment of an electronic financial 
        terminal if the commissioner finds that: 
           (a) There is reason to believe that the terminal will be 
        properly and safely managed; 
           (b) The applicant is financially sound; 
           (c) The proposed charges for making the services of the 
        terminal available to financial institutions are fair, 
        equitable, and nondiscriminatory; 
           (d) The applicant has furnished all of the information 
        required by rule; 
           (e) The terminal applicant will not gain an unfair 
        competitive advantage because the terminal is not operationally 
        available to other financial institutions or their data 
        processors within a reasonable period of time; and. 
           (f) The location and placement of the electronic financial 
        terminal is not designed to give or promote an unfair 
        competitive advantage to any financial institution. 
           If the commissioner has not denied the application within 
        45 days of its submission, the authorization shall be deemed to 
        be granted. 
           Sec. 9.  Minnesota Statutes 1994, section 48.475, 
        subdivision 3, is amended to read: 
           Subd. 3.  [GENERAL REQUIREMENTS.] If the bank at which a 
        trust service office is to be established has exercised trust 
        powers, then the trust company or bank which is establishing the 
        trust service office shall enter into an agreement respecting 
        those fiduciary powers to which the trust company or bank shall 
        succeed and shall file the agreement with the commissioner.  The 
        trust company or bank which is establishing a trust service 
        office under subdivision 1 shall publish a notice of the filing 
        in the form prescribed by the commissioner in a newspaper 
        published in the municipality in which the trust service office 
        is to be located, and if there is no such newspaper, then at the 
        county seat of the county in which the trust service office is 
        to be located.  The notice shall be published once in a 
        qualified newspaper in the municipality in which the proposed 
        trust service office is to be located, and if there is no such 
        newspaper, then in a qualified newspaper likely to give notice 
        in the municipality in which the proposed trust service office 
        is to be located, and proof of publication shall be filed with 
        the commissioner immediately after publication of the notice of 
        filing.  After filing and publication, the trust company or bank 
        establishing the trust service office shall, as of the date the 
        office first opens for business, and without further 
        authorization of any kind, succeed to and be substituted for the 
        bank at which the trust service office is located as to all 
        fiduciary powers, rights, duties, privileges, and liabilities of 
        the bank in its capacity as fiduciary for all estates, trusts, 
        conservatorships, guardianships, and other fiduciary 
        relationships of which the bank is then serving as fiduciary, 
        except as may be otherwise specified in the agreement between 
        the bank and the trust company or bank which has established the 
        trust service office.  The trust company or bank which has 
        established the trust service office shall also be deemed named 
        as fiduciary in all writings, including, but not limited to, 
        wills, trusts, court orders, and similar documents and 
        instruments, naming the bank at which the trust service office 
        is located signed before the date the trust service office first 
        opens for business, unless expressly negated by the writing or 
        otherwise specified in the agreement between the trust company 
        or bank and the bank at which the trust service office is 
        located.  On the effective date of the substitution, the bank at 
        which the trust service office has been established shall be 
        released and absolved from all fiduciary duties and obligations 
        under the writings and shall discontinue its exercise of trust 
        powers on all matters not specifically retained by the 
        agreement.  This subdivision does not absolve the bank from 
        liabilities arising out of any breach of fiduciary duty or 
        obligation occurring prior to the date the trust service office 
        first opens for business.  This subdivision does not affect the 
        authority, duties, or obligations of a bank with respect to 
        relationships which may be established without trust powers, 
        whether the relationships arise before or after the 
        establishment of the trust service office.  
           Sec. 10.  Minnesota Statutes 1994, section 48.61, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [MERGER WITH SUBSIDIARIES; AUTHORITY.] (a) 
        Notwithstanding any other law to the contrary, a bank may merge 
        a subsidiary authorized and established according to this 
        section into itself if it owns 100 percent of the outstanding 
        voting stock.  
           (b) A merger of a subsidiary authorized by subdivision 1 
        must conform to the procedures in section 302A.621.  
           (c) Before filing the articles of merger with the secretary 
        of state, the merger plan must be filed with and approved in 
        writing by the commissioner who shall determine that:  
           (1) the provisions of section 302A.621 are followed; and 
           (2) the merger will not have an undue adverse effect on the 
        safety and soundness of the bank. 
           Sec. 11.  Minnesota Statutes 1994, section 48.65, is 
        amended to read: 
           48.65 [TRUST COMPANIES TO COMPLY WITH CERTAIN LAWS.] 
           No trust company of this state shall conduct a banking 
        business, as defined in section 47.02, without fully complying 
        with the provisions of section 48.22 48.221 relating to the 
        reserve requirements of the state banks.  
           Sec. 12.  Minnesota Statutes 1994, section 48.92, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TERMS.] When used in sections 48.90 to 
        48.991 48.99, the terms defined in this section have the 
        meanings given them, unless their context requires a different 
        meaning.  
           Sec. 13.  Minnesota Statutes 1994, section 49.01, 
        subdivision 3, is amended to read: 
           Subd. 3.  [INVESTMENT COMPANY.] "Investment company" means 
        any person, copartnership, association, or corporation referred 
        to in sections 54.26 to 54.29 54.297. 
           Sec. 14.  Minnesota Statutes 1994, section 51A.58, is 
        amended to read: 
           51A.58 [INTERSTATE BRANCHING.] 
           An association, whether or not the subsidiary of a savings 
        and loan holding company, may, by acquisition, merger, purchase 
        and assumption of some or all of the assets and liabilities, or 
        consolidation, establish or operate branch offices in any 
        reciprocating state, and a savings and loan association 
        chartered in any reciprocating state may establish or operate 
        branch offices in this state by acquisition, merger, purchase, 
        and assumption of some or all of the assets or liabilities or 
        consolidation.  A savings and loan holding company with its 
        headquarters in this state may acquire by direct or indirect 
        ownership or control the voting shares of a savings and loan 
        holding company, savings and loan association, or savings bank 
        located in any reciprocating state, and a savings and loan 
        holding company with its headquarters in a reciprocating state, 
        may acquire by direct or indirect ownership or control the 
        voting shares of a savings and loan holding company, a savings 
        and loan association, or savings bank located in this state, and 
        may acquire and merge with a savings and loan holding company 
        with its headquarters in this state.  For the purposes of this 
        section, "reciprocating state" is a state that authorizes the 
        establishment of branch offices in that state by an association 
        located in this state, and the acquisition of savings and loan 
        associations and savings banks located in that state by a 
        savings and loan holding company with its headquarters in this 
        state, under conditions no more restrictive than those imposed 
        by the laws of Minnesota as determined by the commissioner of 
        commerce. 
           The commissioner of commerce shall adopt rules to provide 
        that procedural requirements equivalent to those contained in 
        sections 48.90 to 48.991 48.99 apply to reciprocal interstate 
        branching and acquisitions by savings and loan associations. 
           Sec. 15.  Minnesota Statutes 1994, section 53.04, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  (a) The right to make loans, secured or 
        unsecured, at the rates and on the terms and other conditions 
        permitted licensees under chapter 56.  Loans made under the 
        authority of section 56.125 must be in amounts in compliance 
        with section 53.05, clause (7).  All other loans made under the 
        authority of chapter 56 must be in amounts in compliance with 
        section 53.05, clause (7), or 56.131, subdivision 1, paragraph 
        (a), whichever is less.  The right to extend credit or lend 
        money and to collect and receive charges therefor as provided by 
        chapter 334, or in lieu thereof to charge, collect, and receive 
        interest at the rate of 21.75 percent per annum, including the 
        right to contract for, charge, and collect all other charges 
        including discount points, fees, late payment charges, and 
        insurance premiums on the loans to the same extent permitted on 
        loans made under the authority of chapter 56, regardless of the 
        amount of the loan.  The provisions of sections 47.20 and 47.21 
        do not apply to loans made under this subdivision, except as 
        specifically provided in this subdivision.  Nothing in this 
        subdivision is deemed to supersede, repeal, or amend any 
        provision of section 53.05.  A licensee making a loan under this 
        chapter secured by a lien on real estate shall comply with the 
        requirements of section 47.20, subdivision 8.  
           (b) Loans made under this subdivision at a rate of interest 
        not in excess of that provided for in paragraph (a) may be 
        secured by real or personal property, or both.  If the proceeds 
        of a loan secured by a first lien on the borrower's primary 
        residence are used to finance the purchase of the borrower's 
        primary residence, the loan must comply with the provisions of 
        section 47.20.  
           (c) A loan made under this subdivision that is secured by 
        real estate and that is in a principal amount of $7,500 $12,000 
        or more and a maturity of 60 months or more may contain a 
        provision permitting discount points, if the loan does not 
        provide a loan yield in excess of the maximum rate of interest 
        permitted by this subdivision.  Loan yield means the annual rate 
        of return obtained by a licensee computed as the annual 
        percentage rate is computed under Federal Regulation Z.  If the 
        loan is prepaid in full, the licensee must make a refund to the 
        borrower to the extent that the loan yield will exceed the 
        maximum rate of interest provided by this subdivision when the 
        prepayment is taken into account.  
           (d) An agency or instrumentality of the United States 
        government or a corporation otherwise created by an act of the 
        United States Congress or a lender approved or certified by the 
        secretary of housing and urban development, or approved or 
        certified by the administrator of veterans affairs, or approved 
        or certified by the administrator of the farmers home 
        administration, or approved or certified by the federal home 
        loan mortgage corporation, or approved or certified by the 
        federal national mortgage association, that engages in the 
        business of purchasing or taking assignments of mortgage loans 
        and undertakes direct collection of payments from or enforcement 
        of rights against borrowers arising from mortgage loans, is not 
        required to obtain a certificate of authorization under this 
        chapter in order to purchase or take assignments of mortgage 
        loans from persons holding a certificate of authorization under 
        this chapter. 
           Sec. 16.  Minnesota Statutes 1994, section 53.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [FREQUENCY AND EXPENSE.] The commissioner 
        shall make examinations for the purposes set forth in section 
        46.04, subdivision 1, at least once every 18 calendar months, of 
        each authorized place of business of every industrial loan and 
        thrift company with the right to issue thrift certificates for 
        investment organized or operating under this chapter to satisfy 
        the commissioner that the corporation is in a solvent condition 
        and is complying with the requirements of this chapter and 
        operating according to sound business principles.  In order to 
        enforce actions in this connection, the commissioner is hereby 
        vested with the same authority as in the examination and 
        regulation of state banks.  The corporation so examined shall 
        pay to the commissioner such fees as may be required under 
        section 46.131.  The commissioner may maintain an action for the 
        recovery of such costs in any court of competent jurisdiction.  
           Sec. 17.  Minnesota Statutes 1994, section 53.09, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REPORT TO COMMISSIONER.] (1) Each industrial 
        loan and thrift company shall annually on or before the first 
        day of February March file a report with the commissioner 
        stating in detail, under appropriate heads, its assets and 
        liabilities at the close of business on the last day of the 
        preceding calendar year.  This report shall be made under oath 
        in the form prescribed by the commissioner. 
           (2) Each industrial loan and thrift company which holds 
        authority to accept accounts pursuant to section 53.04, 
        subdivision 5, shall in place of the requirement in clause (1) 
        submit the reports and make the publication required of state 
        banks pursuant to section 48.48.  
           (3) Within 30 days following a change in controlling 
        ownership of the capital stock of an industrial loan and thrift 
        company, it shall file a written report with the commissioner 
        stating in detail the nature of such change in ownership.  
           Sec. 18.  Minnesota Statutes 1994, section 53.09, is 
        amended by adding a subdivision 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. 
           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. 19.  Minnesota Statutes 1994, section 56.11, is 
        amended to read: 
           56.11 [BOOKS OF ACCOUNT; ANNUAL REPORT.] 
           The licensee shall keep and use in the licensee's business 
        such books, accounts, and records as will enable the 
        commissioner to determine whether the licensee is complying with 
        the provisions of this chapter and with the rules lawfully made 
        by the commissioner hereunder.  Every licensee shall preserve 
        such books, accounts, and records, including cards used in the 
        card system, if any, for at least two years after making the 
        final entry on any loan recorded therein.  Accounting systems 
        maintained in whole or in part by mechanical or electronic data 
        processing methods which provide information equivalent to that 
        otherwise required are acceptable for this purpose.  
           Each licensee shall annually on or before the fifteenth day 
        of March, except in odd numbered years and then on or before the 
        seventh first day of February March, file a report with the 
        commissioner giving such relevant information as the 
        commissioner reasonably may require concerning the business and 
        operations during the preceding calendar year of each licensed 
        place of business, conducted by such licensee within the state.  
        Such report shall be made under oath and shall be in the form 
        prescribed by the commissioner, who shall make and publish 
        annually an analysis and recapitulation of such reports. 
           Sec. 20.  Minnesota Statutes 1994, section 56.12, is 
        amended to read: 
           56.12 [ADVERTISING; TAKING OF SECURITY; PLACE OF BUSINESS.] 
           No licensee shall advertise, print, display, publish, 
        distribute, or broadcast, or cause or permit to be advertised, 
        printed, displayed, published, distributed, or broadcast, in any 
        manner any statement or representation with regard to the rates, 
        terms, or conditions for the lending of money, credit, goods, or 
        things in action which is false, misleading, or deceptive.  The 
        commissioner may order any licensee to desist from any conduct 
        which the commissioner shall find to be a violation of the 
        foregoing provisions. 
           The commissioner may require that rates of charge, if 
        stated by a licensee, be stated fully and clearly in such manner 
        as the commissioner may deem necessary to prevent 
        misunderstanding thereof by prospective borrowers.  In lieu of 
        the disclosure requirements of this section and section 56.14, a 
        licensee may give the disclosures required by the federal 
        Truth-in-Lending Act. 
           A licensee may take a lien upon real estate as security for 
        any loan exceeding $2,700 $4,320 in principal amount made under 
        this chapter.  The provisions of sections 47.20 and 47.21 do not 
        apply to loans made under this chapter, except as provided in 
        this section.  No loan secured by a first lien on a borrower's 
        primary residence shall be made pursuant to this section if the 
        proceeds of the loan are used to finance the purchase of the 
        borrower's primary residence, unless:  
           (1) the proceeds of the loan are used to finance the 
        purchase of a manufactured home or a prefabricated building; or 
           (2) the proceeds of the loan are used in whole or in part 
        to satisfy the balance owed on a contract for deed.  
           If the proceeds of the loan are used to finance the 
        purchase of the borrower's primary residence, the licensee shall 
        consent to the subsequent transfer of the real estate if the 
        existing borrower continues after transfer to be obligated for 
        repayment of the entire remaining indebtedness.  The licensee 
        shall release the existing borrower from all obligations under 
        the loan instruments, if the transferee (1) meets the standards 
        of credit worthiness normally used by persons in the business of 
        making loans, including but not limited to the ability of the 
        transferee to make the loan payments and satisfactorily maintain 
        the property used as collateral, and (2) executes an agreement 
        in writing with the licensee whereby the transferee assumes the 
        obligations of the existing borrower under the loan 
        instruments.  Any such agreement shall not affect the priority, 
        validity or enforceability of any loan instrument.  A licensee 
        may charge a fee not in excess of one-tenth of one percent of 
        the remaining unpaid principal balance in the event the loan is 
        assumed by the transferee and the existing borrower continues 
        after the transfer to be obligated for repayment of the entire 
        assumed indebtedness.  A licensee may charge a fee not in excess 
        of one percent of the remaining unpaid principal balance in the 
        event the remaining indebtedness is assumed by the transferee 
        and the existing borrower is released from all obligations under 
        the loan instruments, but in no event shall the fee exceed 
        $150 $240. 
           A licensee making a loan under this chapter secured by a 
        lien on real estate shall comply with the requirements of 
        section 47.20, subdivision 8.  
           No licensee shall conduct the business of making loans 
        under this chapter within any office, room, or place of business 
        in which any other business is solicited or engaged in, or in 
        association or conjunction therewith, if the commissioner finds 
        that the character of the other business is such that it would 
        facilitate evasions of this chapter or of the rules lawfully 
        made hereunder.  The commissioner may promulgate rules dealing 
        with such other businesses. 
           No licensee shall transact the business or make any loan 
        provided for by this chapter under any other name or at any 
        other place of business than that named in the license.  No 
        licensee shall take any confession of judgment or any power of 
        attorney.  No licensee shall take any note or promise to pay 
        that does not accurately disclose the principal amount of the 
        loan, the time for which it is made, and the agreed rate or 
        amount of charge, nor any instrument in which blanks are left to 
        be filled in after execution.  Nothing herein is deemed to 
        prohibit the making of loans by mail or arranging for settlement 
        and closing of real estate secured loans by an unrelated 
        qualified closing agent at a location other than the licensed 
        location. 
           Sec. 21.  Minnesota Statutes 1994, section 56.125, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REAL ESTATE AS SECURITY.] A licensee may take a 
        lien upon real estate as security for any open-end loan at or 
        after such time as the outstanding balance first exceeds 
        $2,700 $4,320.  A subsequent reduction in the balance 
        below $2,700 $4,320 has no effect on the lien.  A licensee may 
        retain the security interest until it terminates the open-end 
        account.  If there is no outstanding balance in the account and 
        there is no commitment by the licensee to a line of credit in 
        excess of $2,700 $4,320, the licensee shall, within 20 days 
        following written demand by the borrower, deliver to the 
        borrower a release of the mortgage on any real property taken as 
        security for the open-end loan agreement.  A real estate 
        mortgage authorized for a financial institution secures all 
        advances and obligations thereunder from the date of recording.  
           Sec. 22.  Minnesota Statutes 1994, section 56.131, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ADJUSTMENT OF DOLLAR AMOUNTS.] (a) The dollar 
        amounts in this section, sections 53.04, subdivision 3a, 
        paragraph (c), 56.01, 56.12, and 56.125 shall change 
        periodically, as provided in this section, according to and to 
        the extent of changes in the implicit price deflator for the 
        gross national domestic product, 1972 1987 = 100, compiled by 
        the United States Department of Commerce, and hereafter referred 
        to as the index.  The index for December 1980 1991 is the 
        reference base index for adjustments of dollar amounts, except 
        that the index for December 1984 is the reference base index for 
        the minimum default charge of $4.  The reference base index for 
        subdivision 1, paragraph (a), clause (1), and subdivision 2, 
        paragraph (d), is December 1990. 
           (b) The designated dollar amounts shall change on July 1 of 
        each even-numbered year if the percentage of change, calculated 
        to the nearest whole percentage point, between the index for 
        December of the preceding year and the reference base index is 
        ten percent or more, but; 
           (1) the portion of the percentage change in the index in 
        excess of a multiple of ten percent shall be disregarded and the 
        dollar amounts shall change only in multiples of ten percent of 
        the amounts appearing in Laws 1981, chapter 258 this act, on the 
        date of enactment; and 
           (2) the dollar amounts shall not change if the amounts 
        required by this section are those currently in effect pursuant 
        to Laws 1981, chapter 258 this act, as a result of earlier 
        application of this section.  
           (c) If the index is revised, the percentage of change 
        pursuant to this section shall be calculated on the basis of the 
        revised index.  If a revision of the index changes the reference 
        base index, a revised reference base index shall be determined 
        by multiplying the reference base index then applicable by the 
        rebasing factor furnished by the department of commerce.  If the 
        index is superseded, the index referred to in this section is 
        the one represented by the department of commerce as reflecting 
        most accurately changes in the purchasing power of the dollar 
        for consumers.  
           (d) The commissioner shall announce and publish:  
           (1) on or before April 30 of each year in which dollar 
        amounts are to change, the changes in dollar amounts required by 
        paragraph (b); and 
           (2) promptly after the changes occur, changes in the index 
        required by paragraph (c) including, if applicable, the 
        numerical equivalent of the reference base index under a revised 
        reference base index and the designation or title of any index 
        superseding the index.  
           (e) A person does not violate this chapter with respect to 
        a transaction otherwise complying with this chapter if that 
        person relies on dollar amounts either determined according to 
        paragraph (b), clause (2) or appearing in the last publication 
        of the commissioner announcing the then current dollar amounts.  
           (f) The adjustments provided in this section shall not be 
        affected unless explicitly provided otherwise by law.  
           Sec. 23.  Minnesota Statutes 1994, section 56.131, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DISCOUNT POINTS.] A loan made under this section 
        that is secured by real estate and that is in a principal amount 
        of $7,500 $12,000 or more and has a maturity of 60 months or 
        more may contain a provision permitting discount points, if the 
        loan does not provide a loan yield in excess of the maximum rate 
        of interest permitted by this section.  Loan yield means the 
        annual rate of return obtained by a licensee computed as the 
        annual percentage rate is computed under Federal Regulation Z.  
        If the loan is prepaid in full, the licensee must make a refund 
        to the borrower to the extent that the loan yield will exceed 
        the maximum rate of interest provided by this section when the 
        prepayment is taken into account.  
           Sec. 24.  Minnesota Statutes 1994, section 56.17, is 
        amended to read: 
           56.17 [LIMITATION; ASSIGNMENT OF WAGES; SECURITY 
        AGREEMENT.] 
           No assignment of, or order for payment of, any salary, 
        wages, commissions, or other compensation for services earned or 
        to be earned, given to secure any loan made by any licensee 
        under this chapter, shall be valid unless the principal amount 
        of the loan is $1,200 or less and is paid to the borrower 
        simultaneously with its execution; nor shall any assignment or 
        order, or any security agreement or other lien on household 
        furniture then in the possession and use of the borrower, be 
        valid unless it is in writing, signed in person by the borrower, 
        nor if the borrower is married, unless it is signed in person by 
        both husband and wife; provided, that written assent of a spouse 
        shall not be required when husband and wife have been living 
        separate and apart for a period of at least five months prior to 
        the making of the assignment, order, security agreement, or 
        lien.  If the borrower is married, an assignment, order, 
        security agreement, or other lien is not valid without the 
        spouse's written consent, if the spouse's consent would be 
        necessary under applicable law to make the property offered as 
        security available to satisfy the debt in the event of default. 
           Under any assignment or order for the payment of future 
        salary, wages, commissions, or other compensation for services, 
        given as security for a loan made by any licensee under this 
        chapter, a sum not to exceed ten percent of the borrower's 
        salary, wages, commissions, or other compensation for services 
        shall be collectible from the employer of the borrower by the 
        licensee at the time for each payment to the borrower of salary, 
        wages, commissions, or other compensation for services, from the 
        time that a copy of the assignment, verified by the oath of the 
        licensee or the licensee's agent, together with a similarly 
        verified statement of the amount unpaid upon the loan and a 
        printed copy of this section is served upon the employer; 
        provided, that this section shall not be construed as giving the 
        assignee any greater rights than those under section 181.05. 
           This section shall control, with respect to licensees, 
        notwithstanding anything in section 47.59, subdivision 12, 
        clause (c), to the contrary. 
           Sec. 25.  [REVISOR INSTRUCTION.] 
           The revisor of statutes shall change the term "building and 
        loan association" or "savings, building and loan association" or 
        "savings and loan association" or similar term to "savings 
        association" or similar term in Minnesota Statutes and Minnesota 
        Rules. 
           Sec. 26.  [REPEALER.] 
           Minnesota Statutes 1994, sections 46.03; 48.611; and 48.97, 
        subdivisions 2, 3, and 4, are repealed. 
           Sec. 27.  [EFFECTIVE DATE.] 
           Sections 1 to 21 and 23 to 26 are effective the day 
        following final enactment.  
                                   ARTICLE 2 
                             REGULATORY IMPROVEMENT 
           Section 1.  Minnesota Statutes 1994, section 46.04, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [FINANCIAL INSTITUTIONS AND LICENSEE RECORDS.] 
        For purposes of examination and regulation of those entities 
        referred to in subdivisions 1 and 2, records may be maintained 
        on optical image storage systems acceptable to the 
        commissioner.  Electronically maintained and stored records must 
        meet the following minimum standards:  
           (1) a document or record may be transferred to and stored 
        on a nonerasable imaging system and retained only in that format 
        if all documents and records preserved on nonerasable optical 
        imaging systems meet nationally recognized standards for 
        permanent records and are available for retrieval for as long as 
        applicable law requires; 
           (2) a backup copy of the record is created and stored at a 
        site other than the site where the original is kept.  The backup 
        copy must be preserved either:  (i) on a nonerasable optical 
        imaging system; or (ii) by another reproduction method approved 
        by the commissioner; and 
           (3) all contracts for third-party maintenance and storage 
        of those records must include assurance of access by the 
        commissioner consistent with the purposes of this section. 
           Sec. 2.  Minnesota Statutes 1994, section 47.10, 
        subdivision 3, is amended to read: 
           Subd. 3.  [LEASEHOLD PLACE OF BUSINESS; APPROVAL OF CERTAIN 
        LEASE AGREEMENTS.] No bank, trust company, savings bank, or 
        building and loan savings association may acquire real property 
        and improvements of any nature to it for its place of business 
        by lease agreement if the lessor has an existing direct or 
        indirect interest in the management or ownership of the bank, 
        trust company, savings bank, or building and loan savings 
        association without prior written approval by the commissioner.  
        This includes subsequent amendments and associated leasehold 
        improvements.  A lessee's expenditures to maintain the leasehold 
        premises consistent with ordinary business conditions and within 
        the preapproved lease agreement does not constitute an amendment 
        requiring prior written approval. 
           Sec. 3.  Minnesota Statutes 1994, section 47.20, 
        subdivision 5, is amended to read: 
           Subd. 5.  [PREPAYMENT PENALTY.] (a) Unless the mortgagor 
        waives its right to prepay the mortgage loan without penalty, in 
        a uniform written disclosure waiver approved by the commissioner 
        and signed by the mortgagor, no conventional loan or loan 
        authorized in subdivision 1 made on or after the effective date 
        of Laws 1977, chapter 350 shall contain a provision requiring or 
        permitting the imposition of a penalty in the event the loan or 
        advance of credit is prepaid.  The prepayment penalty shall not 
        exceed the lesser of two percent of the unpaid principal balance 
        or 60 days interest on the unpaid principal balance.  A lender 
        that offers a mortgage loan with a prepayment penalty shall also 
        offer a mortgage loan without a prepayment penalty. 
           This section does not permit the imposition of a prepayment 
        penalty in the event that the property securing the mortgage 
        loan is sold or the mortgage loan is prepaid in part.  No 
        prepayment penalty may be enforced after 42 months from the date 
        of the mortgage loan. 
           (b) A precomputed conventional loan or precomputed loan 
        authorized in subdivision 1 shall provide for a refund of the 
        precomputed finance charge according to the actuarial method if 
        the loan is paid in full by cash, renewal or refinancing, or a 
        new loan, one month or more before the final installment due 
        date.  The actuarial method for the purpose of this section is 
        the amount of interest attributable to each fully unexpired 
        monthly installment period of the loan contract following the 
        date of prepayment in full, calculated as if the loan was made 
        on an interest-bearing basis at the rate of interest provided 
        for in the note based on the assumption that all payments were 
        made according to schedule.  A precomputed loan for the purpose 
        of this section means a loan for which the debt is expressed as 
        a sum comprised of the principal amount and the amount of 
        interest for the entire term of the loan computed actuarially in 
        advance on the assumption that all scheduled payments will be 
        made when due, and does not include a loan for which interest is 
        computed from time to time by application of a rate to the 
        unpaid principal balance, interest-bearing loans, or 
        simple-interest loans.  For the purpose of calculating a refund 
        for precomputed loans under this section, any portion of the 
        finance charge for extending the first payment period beyond one 
        month may be ignored.  Nothing in this section shall be 
        considered a limitation on discount points or other finance 
        charges charged or collected in advance, and nothing in this 
        section shall require a refund of the charges in the event of 
        prepayment.  Nothing in this section shall be considered to 
        supersede section 47.204. 
           Sec. 4.  Minnesota Statutes 1994, section 47.20, 
        subdivision 10, is amended to read: 
           Subd. 10.  [WAIVER.] Notwithstanding any other law Except 
        as provided in subdivision 5, the provisions of this section may 
        not be waived by any oral or written agreement executed by any 
        person. 
           Sec. 5.  Minnesota Statutes 1994, section 47.52, is amended 
        to read: 
           47.52 [AUTHORIZATION.] 
           (a) With the prior approval of the commissioner, any bank 
        doing business in this state may establish and maintain not more 
        than five detached facilities provided the facilities are 
        located within the municipality in which the principal office of 
        the applicant bank is located; or within 5,000 feet of its 
        principal office measured in a straight line from the closest 
        points of the closest structures involved; or within 100 miles 
        of its principal office measured in a straight line from the 
        closest points of the closest structures involved, if the 
        detached facility is within any municipality in which no bank is 
        located at the time of application or if the detached facility 
        is in a municipality having a population of more than 10,000, or 
        if the detached facility is located in a municipality having a 
        population of 10,000 or less, as determined by the commissioner 
        from the latest available data from the state demographer, or 
        for municipalities located in the seven-county metropolitan area 
        from the metropolitan council, and all the banks having a 
        principal office in the municipality have consented in writing 
        to the establishment of the facility. 
           (b) A detached facility shall not be closer than 50 feet to 
        a detached facility operated by any other bank and shall not be 
        closer than 100 feet to the principal office of any other bank, 
        the measurement to be made in the same manner as provided 
        above.  This paragraph shall not be applicable if the proximity 
        to the facility or the bank is waived in writing by the other 
        bank and filed with the application to establish a detached 
        facility. 
           (c) Any bank is allowed, in addition to other facilities, 
        one drive-in or walk-up facility located between 150 to 1,500 
        feet of the main banking house or within 1,500 feet from a 
        detached facility.  The drive-in or walk-up facility permitted 
        by this clause is subject to paragraph (b) and section 47.53. 
           (d) A bank is allowed, in addition to other facilities, 
        part-time deposit-taking locations at elementary and secondary 
        schools located within the municipality in which the main 
        banking house or a detached facility is located if they are 
        established in connection with student education programs 
        approved by the school administration and consistent with safe, 
        sound banking practices. 
           Sec. 6.  Minnesota Statutes 1994, section 47.56, is amended 
        to read: 
           47.56 [TRANSFER OF LOCATION.] 
           The location of a detached facility may be 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 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. 7.  Minnesota Statutes 1994, 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. other than 
           (b) "Electronic financial terminal" does not include: 
           (1) a telephone or; 
           (2) an electronic information processing device that is 
        used internally by a financial institution to conduct the 
        business activities of the institution, that is established to 
        do either or both of the following: 
           (a) capture the data necessary to initiate financial 
        transactions; or 
           (b) through its attendant support system, store or initiate 
        the transmission of the information necessary to consummate a 
        financial transaction.; 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 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.  
           Sec. 8.  Minnesota Statutes 1994, section 47.62, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPROVAL REQUIRED.] No electronic financial 
        terminal shall be established by a person other than a state or 
        federal savings and loan association, state or federal savings 
        bank, state or federal credit union, or state bank or national 
        banking association unless the commissioner has approved the 
        establishment of the terminal. 
           Sec. 9.  Minnesota Statutes 1994, section 47.62, is amended 
        by adding a subdivision to read: 
           Subd. 5.  [ESTABLISHMENT BY NOTICE.] A bank, savings bank, 
        savings association, or credit union organized under the laws of 
        this state may, after completing the notification procedure 
        required by this subdivision, establish and maintain one or more 
        electronic financial terminals.  The filing must be on forms 
        provided by the commissioner.  No electronic financial terminal 
        may be established under sections 47.61 to 47.74 if disallowed 
        by order of the commissioner within 15 days of the filing of a 
        complete and acceptable notification of the intent to establish 
        an electronic financial terminal. 
           Sec. 10.  Minnesota Statutes 1994, section 47.62, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [RELOCATION; PROCEDURE.] An application or 
        notification to relocate an existing financial terminal outside 
        a radius of three miles measured in a straight line must be 
        approved by, or a notification must be filed with, the 
        commissioner of commerce as provided for in this section. 
           Sec. 11.  Minnesota Statutes 1994, section 47.67, is 
        amended to read: 
           47.67 [ADVERTISING.] 
           No advertisement by a person which relates to an electronic 
        financial terminal may be inaccurate or misleading with respect 
        to such a terminal.  Except with respect to direct mailings by 
        financial institutions to their customers, the advertising of 
        rate of interest paid on accounts in connection with electronic 
        financial terminals is prohibited.  Any advertisement, either on 
        or off the site of an electronic financial terminal, promoting 
        the use or identifying the location of an electronic financial 
        terminal, which identifies any financial institution, group or 
        combination of financial institutions, or third parties as 
        owning or providing for the use of its services is prohibited.  
        The following shall be expressly permitted: 
           (a) a simple directory listing placed at the site of an 
        electronic financial terminal identifying the particular 
        financial institutions using its services; 
           (b) the use of a generic name, either on or off the site of 
        an electronic financial terminal, which does not promote or 
        identify any particular financial institution, group or 
        combination of financial institutions, or any third parties; 
           (c) media advertising or direct mailing of information by a 
        financial institution or retailer identifying locations of 
        electronic financial terminals and promoting their usage; and 
           (d) any advertising, whether on or off the site, relating 
        to electronic financial terminals, or the services performed at 
        the electronic financial terminals located on the premises of 
        the main office, or any office or detached facility of any 
        financial institution; 
           (e) a coupon or other promotional advertising that is 
        printed upon the reverse side of the receipt or record of each 
        transaction required under section 47.69, subdivision 6; and 
           (f) promotional advertising displayed on the electronic 
        screen. 
           Sec. 12.  Minnesota Statutes 1994, section 47.69, 
        subdivision 3, is amended to read: 
           Subd. 3.  Every financial institution using an electronic 
        financial terminal shall maintain reasonable procedures to 
        minimize losses from unauthorized withdrawals from its 
        customers' accounts by use of an electronic financial terminal.  
        After a customer makes a bona fide deposit or payment at an 
        electronic financial terminal and has received a receipt, any 
        loss due to theft or other reason shall not be borne by the 
        customer; provided, loss due to the nonpayment or dishonor of a 
        check, or other order for payment, deposited at an electronic 
        financial terminal shall be governed by the applicable 
        provisions of chapter 336.  A financial institution shall be 
        liable for all unauthorized withdrawals unless the unauthorized 
        withdrawal was (1) due to the negligent conduct or the 
        intentional misconduct of the operator of an electronic 
        financial terminal or that operator's agent in which case the 
        operator of an electronic financial terminal or the agent shall 
        be liable, or (2) due to the loss or theft of the customer 
        machine readable card in which case the customer shall be 
        liable, subject to a maximum liability of $50, for those 
        unauthorized withdrawals made prior to the time the financial 
        institution is notified of the loss or theft.  The limitation on 
        liability contained in clause (2) is effective only if the 
        issuer is notified of unauthorized charges contained in a bill 
        within 60 days of receipt of the bill by the person in whose 
        name the card is issued.  For purposes of this subdivision, 
        "unauthorized withdrawal" means a withdrawal by a person other 
        than the customer who does not have actual, implied, or apparent 
        authority for such withdrawal, and from which withdrawal the 
        customer or a member of the customer's family or household 
        receives no benefit. without actual authority to initiate the 
        withdrawal and from which the customer receives no benefit.  The 
        term does not include any withdrawal that is:  (1) initiated by 
        a person who was furnished with the card by the customer, unless 
        the customer has notified the financial institution involved 
        that transfers by that person are no longer authorized; (2) 
        initiated with fraudulent intent by the customer or any person 
        acting in concert with the customer; or (3) initiated by the 
        financial institution or its employee.  
           Sec. 13.  Minnesota Statutes 1994, section 47.69, 
        subdivision 5, is amended to read: 
           Subd. 5.  Any customer of a financial institution may bring 
        a civil action against any person violating any subdivision of 
        this section in the district court in the county of the alleged 
        violator's residence or principal place of business or in the 
        county wherein the alleged violation occurred.  Upon adverse 
        adjudication, the defendant shall be liable for actual damages, 
        or $500, whichever is greater, punitive damages when applicable, 
        together with the court costs and reasonable attorneys' fees 
        incurred by the plaintiff.  The court may provide such equitable 
        relief as it deems necessary or proper, including enjoining the 
        defendant from further violations.  If the unauthorized 
        withdrawal was due to the negligent conduct or the intentional 
        misconduct of an operator or person establishing and maintaining 
        an electronic financial terminal other than a financial 
        institution or agent of a financial institution, that operator 
        or person establishing and maintaining an electronic financial 
        terminal or its agent is liable and subject to a civil action 
        under this subdivision by the financial institution considered 
        liable under subdivision 3 that has reimbursed the customer. 
           Sec. 14.  Minnesota Statutes 1994, section 48.16, is 
        amended to read: 
           48.16 [BANKS MAY NOT PLEDGE ASSETS; EXCEPTIONS.] 
           No bank or trust company shall pledge, hypothecate, assign, 
        transfer, or create a lien upon or charge against any of its 
        assets except as follows:  
           (1) to the state; 
           (2) to secure public deposits; 
           (3) to secure funds of trustees in bankruptcy; 
           (4) to secure money borrowed in good faith from other 
        banks, trust companies, or a financial agency created by act of 
        Congress, or the state in programs specifically authorizing 
        state banks to participate as an eligible local lender; 
           (5) to finance the acquisition of real estate to be carried 
        as an asset as provided for in section 47.10; 
           (6) to secure a liability that arises from a transfer of a 
        direct obligation of, or obligations that are fully guaranteed 
        as to principal and interest by, the United States government or 
        an agency thereof that the bank or trust company is obligated to 
        repurchase. 
           This section shall not be construed to permit the use of 
        assets as security for public deposits other than the securities 
        made eligible by law for that purpose. 
           Sec. 15.  Minnesota Statutes 1994, section 48.24, 
        subdivision 5, is amended to read: 
           Subd. 5.  Loans or obligations shall not be subject under 
        this section to any limitation based upon such capital and 
        surplus to the extent that they are secured or covered by 
        guarantees, or by commitments or agreements to take over or to 
        purchase the same, made by: 
           (1) the commissioner of agriculture on the purchase of 
        agricultural land; 
           (2) any Federal Reserve bank; 
           (3) the United States or any department, bureau, board, 
        commission, or establishment of the United States, including any 
        corporation wholly owned directly or indirectly by the United 
        States; 
           (4) the Minnesota energy and economic development 
        authority; or 
           (5) the Minnesota export finance authority; or 
           (6) a municipality or political subdivision within 
        Minnesota to the extent that the guarantee or collateral is a 
        valid and enforceable general obligation of that political body. 
           Sec. 16.  Minnesota Statutes 1994, section 48.48, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SUBMISSION AND PUBLICATION.] At least four 
        times in each year, and at any other time when so requested by 
        the commissioner, every bank or trust company shall, within 30 
        days of the date of notice, make and transmit to the 
        commissioner or to the commissioner's designee, in a form the 
        commissioner prescribes, a report, verified by its president or 
        vice-president and by its cashier or treasurer, and attested by 
        at least two to in the official minutes of its directors, 
        stating in detail, under appropriate heads, as required by the 
        commissioner, its assets and liabilities at the close of 
        business on the day specified in the request.  The commissioner 
        may accept a report made to a federal authority having 
        supervision of banks or trust companies in fulfilling this 
        requirement.  This statement shall be published once at the 
        expense of the bank or trust company in a qualified newspaper in 
        the municipality or town in which the bank or trust company is 
        located, and if there is no such newspaper, then in a qualified 
        newspaper likely to give notice in the municipality or town in 
        which the bank or trust company is located.  Proof of 
        publication shall be filed with the commissioner immediately 
        after publication of the report, but no later than 60 days 
        following the date of the notice.  That portion of the report 
        constituting the statement of assets, liabilities, and capital 
        and statement of income and expenses must be made available to 
        the public within 45 days of the notice at every location of the 
        bank or trust company including detached facilities and trust 
        service offices. 
           Sec. 17.  Minnesota Statutes 1994, section 48.48, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PENALTIES FOR LATE SUBMISSION.] For failure to 
        send these reports to the commissioner or to the commissioner's 
        designee in the time specified, a bank or trust company shall 
        forfeit to the state the sum of $25 for each day of delay and 
        shall pay the accumulated sum to the commissioner upon a formal 
        demand for payment by the commissioner.  If it appears that a 
        report was mailed transmitted by a bank or trust company on or 
        before the end of the 30-day period, or proof of publication 
        mailed on or before the end of the 60-day period, the 
        commissioner shall waive any forfeit.  In the event it does not 
        appear that a report was timely mailed transmitted, the 
        commissioner may nevertheless waive forfeit upon a showing by 
        the bank or trust company to the satisfaction of the 
        commissioner that failure to send the reports was the result of 
        causes beyond the control of the bank or trust company. 
           Sec. 18.  Minnesota Statutes 1994, section 48.49, is 
        amended to read: 
           48.49 [BOOKS TO BE KEPT.] 
           Every such bank shall open and keep such books and accounts 
        as the commissioner may prescribe, for the purpose of keeping 
        accurate and convenient records of its transactions; and every 
        bank refusing or neglecting so to do shall forfeit $10 for every 
        day of such neglect or refusal.  
           Sec. 19.  Minnesota Statutes 1994, 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, lending 
        money, 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. 20.  [52.211] [STUDENT EDUCATION PROGRAMS.] 
           A credit union is allowed to establish part-time 
        deposit-taking locations at elementary and secondary schools 
        provided that the locations are established in connection with 
        student education programs approved by the school administration 
        and consistent with safe and sound financial institution 
        practices.  For purposes of this section, students do not need 
        to be members of the credit union to participate, and the 
        students' parents are not eligible to become members solely by 
        reason of their child's participation. 
           Sec. 21.  Minnesota Statutes 1994, section 53.015, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CAPITAL STOCK.] "Capital stock" means the par 
        value of preferred or common stock multiplied by the respective 
        number of shares of each type of stock.  For purposes of section 
        53.05, clause (7), capital stock may include an amount of 
        mandatory convertible debentures approved by the commissioner.  
        The terms and conditions for redemption of the qualifying 
        debentures must include the prior written approval of the 
        commissioner as a condition for a redemption, but in no event an 
        amount in excess of 50 percent of total preferred or common 
        stock. 
           Sec. 22.  Minnesota Statutes 1994, section 56.14, is 
        amended to read: 
           56.14 [DUTIES OF LICENSEE.] 
           Every licensee shall: 
           (1) deliver to the borrower (or if there are two or more 
        borrowers to one of them) at the time any loan is made a 
        statement making the disclosures and furnishing the information 
        required by the federal Truth-in-Lending Act, United States 
        Code, title 15, sections 1601 to 1667e, as amended from time to 
        time, with respect to the contract of loan.  A copy of the loan 
        contract may be delivered in lieu of a statement if it discloses 
        the required information; 
           (2) deliver or mail to the borrower without request, a 
        written receipt within 30 days following payment for each 
        payment by coin or currency made on account of any loan wherein 
        charges are computed and paid on unpaid principal balances for 
        the time actually outstanding, specifying the amount applied to 
        charges and the amount, if any, applied to principal, and 
        stating the unpaid principal balance, if any, of the loan; and 
        wherein precomputed charges have been added to the principal of 
        the loan specifying the amount of the payment applied to 
        principal and charges combined, the amount applied to default or 
        extension charges, if any, and stating the unpaid balance, if 
        any, of the precomputed loan contract.  A periodic statement 
        showing a payment received by mail complies with this clause; 
           (3) permit payment to be made in advance in any amount on 
        any contract of loan at any time, but the licensee may apply the 
        payment first to all charges in full at the agreed rate up to 
        the date of the payment; 
           (4) upon repayment of the loan in full, mark indelibly 
        every obligation and security, other than a mortgage or security 
        agreement which secures a new loan to the licensee, signed by 
        the borrower with the word "Paid" or "Canceled," and release any 
        mortgage or security agreement which no longer secures a loan to 
        the licensee, restore any pledge, and cancel and return any 
        note, and any assignment given to the licensee which does not 
        secure a new loan to the licensee within 20 days after the 
        repayment.  For purposes of this requirement, the document 
        including actual evidence of an obligation or security may be 
        maintained, stored, and retrieved in a form or format acceptable 
        to the commissioner under section 46.04, subdivision 3; 
           (5) display prominently in each licensed place of business 
        a full and accurate schedule, to be approved by the 
        commissioner, of the charges to be made and the method of 
        computing the same; furnish a copy of the contract of loan to 
        any person obligated on it or who may become obligated on it at 
        any time upon the request of that person; 
           (6) show in the loan contract or statement of loan the rate 
        or rates of charge on which the charge in the contract is based, 
        expressed in terms of rate or rates per annum.  The rate 
        expression shall be printed in at least 8-point type on the loan 
        statement or copy of the loan contract given to the borrower.; 
           (7) if a payment results in the prepayment of three or more 
        installment payments on a precomputed loan, at the same time the 
        receipt required by clause (2) is delivered or mailed, deliver 
        or mail to the borrower a notice in at least eight-point type as 
        part of the receipt or together with the receipt.  The notice 
        must contain the following statement:  
           "You have substantially prepaid the installment payments on 
           your loan and may experience an interest savings over the 
           remaining term only if you refinance the balance within the 
           next 30 days." 
           Sec. 23.  Minnesota Statutes 1994, section 56.155, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORIZATION.] No licensee shall, 
        directly or indirectly, sell or offer for sale any insurance in 
        connection with any loan made under this chapter except as and 
        to the extent authorized by this section.  The sale of credit 
        life, credit accident and health, and credit involuntary 
        unemployment insurance is subject to the provisions of chapter 
        62B, except that the term of the insurance may exceed 60 months 
        if the term of the loan exceeds 60 months.  Life, accident, 
        health, and involuntary unemployment insurance, or any of them, 
        may be written upon or in connection with any loan but must not 
        be required as additional security for the indebtedness.  If the 
        debtor chooses to procure credit life insurance, credit accident 
        and health insurance, or credit involuntary unemployment 
        insurance as security for the indebtedness, the debtor shall 
        have the option of furnishing this security through existing 
        policies of insurance that the debtor owns or controls, or of 
        furnishing the coverage through any insurer authorized to 
        transact business in this state.  A statement in substantially 
        the following form must be made orally, except for loans by mail 
        pursuant to section 56.12, and provided in writing in bold face 
        type of a minimum size of 12 points to the borrower before the 
        transaction is completed for each credit life, accident and 
        health, and involuntary unemployment insurance coverage sold: 
           CREDIT LIFE INSURANCE, CREDIT DISABILITY INSURANCE, AND 
           CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED 
           TO OBTAIN CREDIT.  YOU MAY BUY ANY INSURANCE FROM ANYONE 
           YOU CHOOSE OR YOU MAY USE EXISTING INSURANCE.  
           The licensee shall disclose whether or not the benefits 
        commence as of the first day of disability or involuntary 
        unemployment and shall further disclose the number of days that 
        an insured obligor must be disabled or involuntarily unemployed, 
        as defined in the policy, before benefits, whether retroactive 
        or nonretroactive, commence.  In case there are multiple 
        obligors under a transaction subject to this chapter, no policy 
        or certificate of insurance providing credit unemployment 
        benefits may be procured by or through a licensee upon more than 
        one of the obligors.  In case there are multiple obligors under 
        a transaction subject to this chapter, no policy or certificate 
        of insurance providing credit accident and health or, credit 
        life insurance, or credit unemployment benefits may be procured 
        by or through a licensee upon more than two of the obligors in 
        which case they shall be insured jointly or in the case of 
        credit unemployment benefits on a basis provided for in rules 
        adopted by the commissioner.  The premium or identifiable charge 
        for the insurance must not exceed that filed by the insurer with 
        the department of commerce.  The charge, computed at the time 
        the loan is made for a period not to exceed the full term of the 
        loan contract on an amount not to exceed the total amount 
        required to pay principal and charges, may be deducted from the 
        proceeds or may be included as part of the principal of any 
        loan.  If a borrower procures insurance by or through a 
        licensee, the statement required by section 56.14 must disclose 
        the cost to the borrower and the type of insurance, and the 
        licensee shall cause to be delivered to the borrower a copy of 
        the policy, certificate, or other evidence thereof, within a 
        reasonable time.  No licensee shall decline new or existing 
        insurance which meets the standards set out in this section nor 
        prevent any obligor from obtaining this insurance coverage from 
        other sources.  Notwithstanding any other provision of this 
        chapter, any gain or advantage to the licensee or to any 
        employee, affiliate, or associate of the licensee from this 
        insurance or the sale or provision thereof is not an additional 
        or further charge in connection with the loan; nor are any of 
        the provisions pertaining to insurance contained in this section 
        prohibited by any other provision of this chapter. 
           Sec. 24.  Minnesota Statutes 1994, section 59A.06, 
        subdivision 2, is amended to read: 
           Subd. 2.  Every licensee shall preserve its records of 
        premium finance transactions for at least three years after 
        making the final entry in respect to any premium finance 
        agreement.  The records may be preserved in photographic form or 
        in a form acceptable to the commissioner under section 46.04, 
        subdivision 3. 
           Sec. 25.  Minnesota Statutes 1994, 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 
        shall not exceed the scheduled indebtedness plus one monthly 
        payment or actual amount of indebtedness, whichever is greater. 
           (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. 
           (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. 26.  Minnesota Statutes 1994, section 62B.08, 
        subdivision 2, is amended to read: 
           Subd. 2.  Each individual policy or group certificate shall 
        provide that in the event of termination of the insurance prior 
        to the scheduled maturity date of the indebtedness, any refund 
        of an amount paid by the debtor for insurance shall be paid or 
        credited promptly to the person entitled thereto; provided, 
        however, that the commissioner shall prescribe a minimum refund 
        and no refund which would be less than such minimum need be made 
        a premium refund or credit need not be made if the amount 
        thereof is less than $5.  The formula to be used in computing 
        the refund shall be filed with and approved by the commissioner. 
           Sec. 27.  Minnesota Statutes 1994, section 300.20, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ELECTION.] The business of savings banks 
        must be managed by a board of at least seven trustees, residents 
        of this state, each of whom, before being authorized to act, 
        must file a written acceptance of the trust.  The business of 
        other corporations must be managed by a board of at least three 
        five directors, unless a greater number is otherwise required by 
        law, elected by ballot by the stockholders or members.  A board 
        of directors of a financial institution referred to in section 
        47.12 which has less than five members on August 1, 1995, is not 
        subject to this requirement but may be increased to not more 
        than five members by order of the commissioner of commerce.  
           Sec. 28.  Minnesota Statutes 1994, section 327B.04, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LICENSE AND BOND REQUIRED.] No person 
        shall act as a dealer in manufactured homes, new or used, 
        without a license and a surety bond as provided in this 
        section.  No person shall manufacture manufactured homes without 
        a license and a surety bond as provided in this section.  The 
        licensing and bonding requirements of this section do not apply 
        to any bank, savings bank, savings and loan association, or 
        credit union, chartered by either this state or the federal 
        government, which acts as a dealer only by repossessing 
        manufactured homes and then offering the homes for resale 
        through the brokering services of a licensed dealer or real 
        estate broker or salesperson.  
           Sec. 29.  Minnesota Statutes 1994, section 327B.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LICENSE REQUIRED.] No person shall engage 
        in the business, either exclusively or in addition to any other 
        occupation of manufacturing, selling, offering to sell, 
        soliciting or advertising the sale of manufactured homes, or act 
        as a broker without being licensed as a manufacturer or a dealer 
        as provided in section 327B.04.  Any person who manufactures, 
        sells, offers to sell, solicits or advertises the sale of 
        manufactured homes, or acts as a broker in violation of this 
        subdivision shall nevertheless be subject to the duties, 
        prohibitions and penalties imposed by sections 327B.01 to 
        327B.12.  This subdivision chapter does not prohibit either an 
        individual from reselling, without a license, a manufactured 
        home which is or has been the individual's residence or any 
        bank, savings bank, savings association, or credit union, 
        chartered by either this state or the federal government, from 
        reselling, without a license, a repossessed manufactured home.  
           Sec. 30.  Minnesota Statutes 1994, 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.  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. 31.  Minnesota Statutes 1994, 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.  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. 32.  Minnesota Statutes 1994, section 334.011, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [LOANS BY CHARITABLE ORGANIZATIONS TO ASSIST 
        CERTAIN SMALL BUSINESSES.] (a) This subdivision applies to 
        nonprofit charitable organizations recognized as exempt from 
        federal income taxation under section 501(c)(3) of the federal 
        Internal Revenue Code of 1986, as amended, that make loans for 
        business purposes to individuals who are disadvantaged or 
        otherwise unable to access standard sources of business credit, 
        in conjunction with a program of education, training, business 
        counseling, or other assistance to assist borrowers in 
        developing their businesses at no extra charge to the borrowers 
        or at a charge that does not exceed the cost of providing the 
        assistance. 
           (b) Notwithstanding section 334.01 and subdivisions 1 and 
        2, an organization described in paragraph (a) may make loans 
        described in that paragraph, in principal amounts not to exceed 
        $10,000, at a rate of interest not to exceed 16 percent per 
        year, and with an origination fee not to exceed two percent of 
        the principal amount. 
           (c) Prior to beginning to make loans under this 
        subdivision, the lender shall provide written notice to the 
        commissioner of commerce, on a form prescribed by that 
        commissioner.  The lender shall at the same time provide a copy 
        of that written notice to the commissioner of trade and economic 
        development. 
           (d) A lender making loans under this subdivision shall 
        annually file with the commissioner an annual report, on a date 
        and on a form prescribed by the commissioner, summarizing the 
        lender's loans made or outstanding in this state during the 
        preceding year.  The lender shall at the same time provide a 
        copy of that annual report to the commissioner of trade and 
        economic development. 
           Sec. 33.  [RECOMMENDATIONS; POINT-OF-SALE TERMINALS.] 
           The commissioner of commerce shall select and convene an 
        informal workgroup to make recommendations to the commissioner 
        regarding whether there is a need to license electronic 
        point-of-sale terminals operated by a retailer for use with 
        credit cards or debit cards.  The informal workgroup must 
        include persons representing retailers, financial institutions, 
        and consumers.  The commissioner shall make recommendations to 
        the legislature no later than December 1, 1994. 
           Sec. 34.  [EFFECTIVE DATE.] 
           Sections 1 to 2, 5 to 15, 17 to 21, 23 to 31, and 33 are 
        effective the day following final enactment.  Sections 3 and 4 
        are effective September 1, 1995.  Section 16 is effective for 
        reports filed for close of business beginning June 30, 1995. 
                                   ARTICLE 3 
                 INTEREST RATE SIMPLIFICATION AND SMALL DOLLAR 
                               CREDIT AVAILABILITY 
           Section 1.  [47.59] [FINANCIAL INSTITUTION CREDIT EXTENSION 
        MAXIMUM RATES.] 
           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. 
           (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. 
           Subd. 2.  [APPLICATION.] This section does not apply to 
        loans and other extensions of credit or purchases of extensions 
        of credit by financial institutions under sections 47.20, 47.21, 
        47.201, 47.204, 47.58, 47.60, 48.153, 48.185, 48.195, 59A.01, 
        168.66 to 168.77, 334.01, 334.011, 334.012, 334.06, and 334.061 
        to 334.19. 
           Subd. 3.  [FINANCE CHARGE FOR LOANS.] (a) With respect to a 
        loan, including a loan pursuant to open-end credit but excluding 
        open-end credit pursuant to a credit card, a financial 
        institution may contract for and receive a finance charge on the 
        unpaid balance of the principal amount not to exceed the greater 
        of:  
           (1) an annual percentage rate not exceeding 21.75 percent; 
        or 
           (2) the total of: 
           (i) 33 percent per year on that part of the unpaid balance 
        of the principal amount not exceeding $750; and 
           (ii) 19 percent per year on that part of the unpaid balance 
        of the principal amount exceeding $750.  
           With respect to open-end credit pursuant to a credit card, 
        the financial institution may contract for and receive a finance 
        charge on the unpaid balance of the principal amount at an 
        annual percentage rate not exceeding 18 percent per year. 
           (b) On a loan where the finance charge is calculated 
        according to the method provided for in paragraph (a), clause 
        (2), the finance charge must be contracted for and earned as 
        provided in that provision or at the single annual percentage 
        rate computed to the nearest .001 of one percent that would earn 
        the same total finance charge at maturity of the contract as 
        would be earned by the application of the graduated rates 
        provided in paragraph (a), clause (2), when the debt is paid 
        according to the agreed terms and the calculations are made 
        according to the actuarial method. 
           (c) With respect to a loan, the finance charge must be 
        considered not to exceed the maximum annual percentage rate 
        permitted under this section if the finance charge contracted 
        for and received does not exceed the equivalent of the maximum 
        annual percentage rate calculated in accordance with Code of 
        Federal Regulations, title 12, part 226, but using the 
        definition of finance charge provided in this section.  
           (d) This subdivision does not limit or restrict the manner 
        of calculating the finance charge, whether by way of add-on, 
        discount, discount points, precomputed charges, single annual 
        percentage rate, variable rate, interest in advance, 
        compounding, average daily balance method, or otherwise, if the 
        annual percentage rate does not exceed that permitted by this 
        section. 
           (e) With respect to a loan secured by real estate, if a 
        finance charge is calculated or collected in advance, or 
        included in the principal amount of the loan, and the borrower 
        prepays the loan in full, the financial institution shall credit 
        the borrower with a refund of the charge to the extent that the 
        annual percentage rate yield on the loan would exceed the 
        maximum rate permitted under paragraph (a), taking into account 
        the prepayment. 
           (f) With respect to all other loans, if the finance charge 
        is calculated or collected in advance, or included in the 
        principal amount of the loan, and the borrower prepays the loan 
        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 loan would exceed the annual percentage rate 
        on the loan as originally determined under paragraph (a) and 
        taking into account the prepayment. 
           (g) 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 loan and that all payments were 
        paid on their due dates. 
           (h) For loans repayable in substantially equal successive 
        monthly installments, the financial institution may calculate 
        the refund under paragraph (f) 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 loan as originally determined 
        under paragraph (a), and for the purpose of calculating the 
        refund may assume that all payments are made on the due date. 
           (i) The dollar amounts in this subdivision and subdivision 
        (6), clause (4), shall change periodically, as provided in this 
        section, according to and to the extent of changes in the 
        implicit price deflator for the gross domestic product, 1987 = 
        100, compiled by the United States Department of Commerce, and 
        hereafter referred to as the index.  The index for December 1991 
        is the reference base index for adjustments of dollar amounts. 
           (j) The designated dollar amounts shall change on July 1 of 
        each even-numbered year if the percentage of change, calculated 
        to the nearest whole percentage point, between the index for 
        December of the preceding year and the reference base index is 
        ten percent or more; but 
           (1) the portion of the percentage change in the index in 
        excess of a multiple of ten percent shall be disregarded and the 
        dollar amounts shall change only in multiples of ten percent of 
        the amounts appearing in this act, on the date of enactment; and 
           (2) the dollar amounts shall not change if the amounts 
        required by this section are those currently in effect pursuant 
        to this act, as a result of earlier application of this section. 
           (k) If the index is revised, the percentage of change 
        pursuant to this section shall be calculated on the basis of the 
        revised index.  If a revision of the index changes the reference 
        base index, a revised reference base index shall be determined 
        by multiplying the reference base index then applicable by the 
        rebasing factor furnished by the department of commerce.  If the 
        index is superseded, the index referred to in this section is 
        the one represented by the department of commerce as reflecting 
        most accurately changes in the purchasing power of the dollar 
        for consumers. 
           (l) The commissioner shall announce and publish: 
           (1) on or before April 30 of each year in which dollar 
        amounts are to change, the changes in dollar amounts required by 
        paragraph (j); and 
           (2) promptly after the changes occur, changes in the index 
        required by paragraph (k) including, if applicable, the 
        numerical equivalent of the reference base index under a revised 
        reference base index and the designation or title of any index 
        superseding the index. 
           (m) A person does not violate this chapter with respect to 
        a transaction otherwise complying with this chapter if that 
        person relies on dollar amounts either determined according to 
        paragraph (j), clause (2), or appearing in the last publication 
        of the commissioner announcing the then current dollar amounts. 
           (n) The adjustments provided in this section shall not be 
        affected unless explicitly provided otherwise by law. 
           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, the rates permitted by those sections.  
           (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.  
           Subd. 5.  [EXTENSIONS AND DEFERMENTS.] 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. 
           Subd. 6.  [ADDITIONAL CHARGES.] (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 amount financed:  
           (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 amount financed:  
           (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 
        amount financed 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 amount financed or 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. 
           Subd. 7.  [ADVANCES TO PERFORM COVENANTS OF BORROWER OR 
        PURCHASER.] (a) If the agreement with respect to a loan or 
        credit sale contract contains covenants by the borrower or 
        purchaser to perform certain duties pertaining to insuring or 
        preserving collateral and the financial institution according to 
        the agreement pays for performance of the duties on behalf of 
        the borrower or purchaser, the financial institution may add to 
        the debt or contract balance the amounts so advanced.  Before or 
        within a reasonable time not less than 30 days after advancing 
        any sums, the financial institution shall state to the borrower 
        or purchaser in writing the amount of sums advanced or to be 
        advanced, any charges with respect to this amount, and any 
        revised payment schedule and, if the duties of the borrower or 
        purchaser performed by the financial institution pertain to 
        insurance, a brief description of the insurance paid for or to 
        be paid for by the financial institution including the type and 
        amount of coverages.  Additional information need not be given.  
        The actions of the financial institution pursuant to this 
        subdivision shall not be deemed to cure the borrower's failure 
        to perform covenants in the loan or credit sale contract, unless 
        the loan or credit sale contract expressly provides otherwise. 
           (b) A finance charge equal to that specified in the loan 
        agreement or credit sale contract may be made for sums advanced 
        under paragraph (a). 
           Subd. 8.  [ATTORNEY'S FEES.] With respect to a loan or 
        credit sale, the agreement may provide for payment by the 
        borrower of the attorney's fees and court costs incurred in 
        connection with collection or foreclosure.  This subdivision is 
        not a limitation on attorney's fees that may be charged to an 
        organization. 
           Subd. 9.  [RIGHT TO PREPAY.] The borrower or purchaser may 
        prepay in full the unpaid balance of a consumer loan or credit 
        sale contract, at any time without penalty.  
           Subd. 10.  [CREDIT INSURANCE.] (a) The sale of credit 
        insurance or mortgage insurance is subject to chapters 61A, 62A, 
        and 62B, as applicable, and the rules adopted under those 
        chapters, if any.  In case there are multiple consumers 
        obligated under a transaction subject to this chapter, no policy 
        or certificate or insurance providing credit life insurance may 
        be procured by or through a financial institution or person 
        described in subdivision 2 upon more than two of the consumers, 
        in which case they may be insured jointly.  
           (b) A financial institution that provides credit insurance 
        in relation to open-end credit may calculate the charge to the 
        borrower in each billing cycle by applying the current premium 
        rate to the balance in the manner permitted with respect to 
        finance charges by the provisions on finance charge in this 
        section.  
           (c) Upon prepayment in full of a consumer loan or credit 
        sale contract by the proceeds of credit insurance or mortgage 
        insurance, the consumer or the consumer's estate is entitled to 
        a refund of any portion of a separate charge for insurance that 
        by reason of prepayment is retained by the financial institution 
        or returned to it by the insurer, unless the charge was computed 
        from time to time on the basis of the balances of the consumer's 
        loan or credit sale contract.  
           (d) This section does not require a financial institution 
        to grant a refund to the consumer if all refunds due to the 
        consumer under paragraph (c) amount to less than $5 and, except 
        as provided in paragraph (c), does not require the financial 
        institution to account to the consumer for any portion of a 
        separate charge for insurance because:  
           (1) the insurance is terminated by performance of the 
        insurer's obligation; 
           (2) the financial institution pays or accounts for premiums 
        to the insurer in amounts and at times determined by the 
        agreement between them; or 
           (3) the financial institution receives directly or 
        indirectly under a policy of insurance a gain or advantage not 
        prohibited by law.  
           (e) Except as provided in paragraph (d), the financial 
        institution shall promptly make or cause to be made an 
        appropriate refund to the consumer with respect to a separate 
        charge made to the consumer for insurance if:  
           (1) the insurance is not provided or is provided for a 
        shorter term than for which the charge to the borrower for 
        insurance was computed; or 
           (2) the insurance terminates before the end of the term for 
        which it was written because of prepayment in full or otherwise. 
           (f) If a financial institution requires insurance, upon 
        notice to the borrower, the borrower has the option of providing 
        the required insurance through an existing policy of insurance 
        owned or controlled by the borrower, or through a policy to be 
        obtained and paid for by the borrower, but the financial 
        institution for reasonable cause may decline the insurance 
        provided by the borrower.  
           Subd. 11.  [PROPERTY AND LIABILITY INSURANCE.] (a) Except 
        as otherwise provided in this section and subject to the 
        provisions on additional charges and maximum finance charges in 
        this section, a financial institution may agree to sell, as an 
        agent, property and liability insurance, and may contract for 
        and receive a charge for this insurance separate from and in 
        addition to other charges.  This section does not authorize the 
        issuance of the insurance prohibited under any statute or rule 
        governing the business of insurance nor does it authorize a 
        financial institution to underwrite insurance.  
           (b) This section does not apply to an insurance premium 
        loan.  A financial institution may request cancellation of a 
        policy of property or liability insurance only after the 
        borrower's default or in accordance with a written authorization 
        by the borrower.  In either case, the cancellation does not take 
        effect until written notice is delivered to the borrower or 
        mailed to the borrower at the borrower's address as stated by 
        the borrower.  The notice must state that the policy may be 
        canceled on a date not less than ten days after the notice is 
        delivered, or, if the notice is mailed, not less than 13 days 
        after it is mailed.  A cancellation may not take effect until 
        those notice periods expire.  
           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.  
           (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.  
           Subd. 13.  [LOANS AND CONTRACTS OTHER THAN CONSUMER LOANS 
        AND CONTRACTS.] Loans and credit sale contracts other than 
        consumer loans and consumer credit sale contracts are not 
        subject to the provisions and limitations of subdivisions 9; 10; 
        11, paragraph (b); and 12.  
           Subd. 14.  [EFFECT OF VIOLATIONS ON RIGHTS OF PARTIES.] (a) 
        If a financial institution has violated any provision of this 
        section applying to collection of finance or other charges, the 
        borrower or purchaser under a credit sale contract may recover 
        from the financial institution actual damages and, in an action 
        other than a class action, a penalty in an amount determined by 
        the court but not less than $100 nor more than $1,000.  With 
        respect to violations arising from other than open-end credit 
        transactions, no action may be brought according to this 
        paragraph and no set-off or recoupment may be asserted according 
        to this paragraph more than one year after the making of the 
        debt.  
           (b) A borrower or purchaser under a credit sale contract is 
        not obligated to pay a charge in excess of that allowed by this 
        section and has a right of refund of any excess charge paid.  A 
        refund may not be made by reducing the borrower's or purchaser's 
        obligation by the amount of the excess charge, unless the 
        financial institution has notified the borrower or purchaser 
        that the borrower or purchaser may request a refund and the 
        borrower or purchaser has not so requested within 30 days 
        thereafter.  If the borrower or purchaser has paid an amount in 
        excess of the lawful obligation under the agreement, the 
        borrower or purchaser may recover the excess amount from the 
        financial institution that made the excess charge or from an 
        assignee of the financial institution's rights that undertakes 
        direct collection of payments from or enforcement of rights 
        against borrowers or purchasers arising from the debt.  
           (c) If a financial institution has contracted for or 
        received a charge in excess of that allowed by this section, or 
        if a borrower or purchaser under a credit sale contract is 
        entitled to a refund and a person liable to the borrower or 
        purchaser refuses to make a refund within a reasonable time 
        after demand, the borrower or purchaser may recover from the 
        financial institution or the person liable in an action other 
        than a class action a penalty in an amount determined by the 
        court but not less than $100 nor more than $1,000.  With respect 
        to excess charges arising from other than open-end credit 
        transactions, no action according to this paragraph may be 
        brought more than one year after the making of the debt.  For 
        purposes of this paragraph, a reasonable time is presumed to be 
        30 days.  
           (d) A violation of this section does not impair rights on a 
        debt.  
           (e) A financial institution is not liable for a penalty 
        under paragraph (a) or (c) if it notifies the borrower or 
        purchaser under a credit sale contract of a violation before the 
        financial institution receives from the borrower or purchaser 
        written notice of the violation or the borrower or purchaser has 
        brought an action under this section, and the financial 
        institution corrects the violation within 45 days after 
        notifying the borrower or purchaser.  If the violation consists 
        of a prohibited agreement, giving the borrower or purchaser a 
        corrected copy of the writing containing the violation is 
        sufficient notification and correction.  If the violation 
        consists of an excess charge, correction must be made by an 
        adjustment or refund.  
           (f) A financial institution may not be held liable in an 
        action brought under this section for a violation of this 
        section if the financial institution shows by a preponderance of 
        evidence that the violation was not intentional and resulted 
        from a bona fide error notwithstanding the maintenance of 
        procedures reasonably adopted to avoid the error.  
           (g) In an action in which it is found that a financial 
        institution has violated this section, the court shall award to 
        the borrower or the purchaser under a credit sale contract the 
        costs of the action and to the borrower's or purchaser's 
        attorneys their reasonable fees.  
           Sec. 2.  [47.60] [CONSUMER SMALL LOANS.] 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the terms defined have the meanings given them:  
           (a) "Consumer small loan" is a loan transaction in which 
        cash is advanced to a borrower for the borrower's own personal, 
        family, or household purpose.  A consumer small loan is a 
        short-term, unsecured loan to be repaid in a single 
        installment.  The cash advance of a consumer small loan is equal 
        to or less than $350. A consumer small loan includes an 
        indebtedness evidenced by but not limited to a promissory note 
        or agreement to defer the presentation of a personal check for a 
        fee.  
           (b) "Consumer small loan lender" is a financial institution 
        as defined in section 47.59 or a person registered with the 
        commissioner and engaged in the business of making consumer 
        small loans.  
           Subd. 2.  [AUTHORIZATION, TERMS, CONDITIONS, AND 
        PROHIBITIONS.] (a) In lieu of the interest, finance charges, or 
        fees in any other law, a consumer small loan lender may charge 
        the following:  
           (i) on any amount up to and including $50, a charge of 
        $5.50 may be added; 
           (ii) on amounts in excess of $50, but not more than $100, a 
        charge may be added equal to ten percent of the loan proceeds 
        plus a $5 administrative fee; 
           (iii) on amounts in excess of $100, but not more than $250, 
        a charge may be added equal to seven percent of the loan 
        proceeds with a minimum of $10 plus a $5 administrative fee; 
           (iv) for amounts in excess of $250 and not greater than the 
        maximum in subdivision 1, paragraph (a), a charge may be added 
        equal to six percent of the loan proceeds with a minimum of 
        $17.50 plus a $5 administrative fee.  
           (b) The term of a loan made under this section shall be 30 
        days.  
           (c) After maturity, the contract rate must not exceed 2.75 
        percent per month of the remaining loan proceeds after the 
        maturity date calculated at a rate of 1/30 of the monthly rate 
        in the contract for each calendar day the balance is outstanding.
           (d) No insurance charges or other charges must be permitted 
        to be charged, collected, or imposed on a consumer small loan 
        except as authorized in this section.  
           (e) On a loan transaction in which cash is advanced in 
        exchange for a personal check, a return check charge may be 
        charged as authorized by section 332.50, subdivision 2, 
        paragraph (d).  
           (f) A loan made under this section must not be repaid by 
        the proceeds of another loan made under this section by the same 
        lender or related interest.  The proceeds from a loan made under 
        this section must not be applied to another loan from the same 
        lender or related interest.  No loan to a single borrower made 
        pursuant to this section shall be split or divided and no single 
        borrower shall have outstanding more than one loan with the 
        result of collecting a higher charge than permitted by this 
        section or in an aggregate amount of principal exceed at any one 
        time the maximum of $350.  
           Subd. 3.  [FILING.] Before a person other than a financial 
        institution as defined by section 47.59 engages in the business 
        of making consumer small loans, the person shall file with the 
        commissioner as a consumer small loan lender.  The filing must 
        be on a form prescribed by the commissioner together with a fee 
        of $150 for each place of business and contain the following 
        information in addition to the information required by the 
        commissioner:  
           (1) evidence that the filer has available for the operation 
        of the business at the location specified, liquid assets of at 
        least $50,000; and 
           (2) a biographical statement on the principal person 
        responsible for the operation and management of the business to 
        be certified.  
           Revocation of the filing and the right to engage in the 
        business of a consumer small loan lender is the same as in the 
        case of a regulated lender license in section 56.09.  
           Subd. 4.  [BOOKS OF ACCOUNT; ANNUAL REPORT; SCHEDULE OF 
        CHARGES; DISCLOSURES.] (a) A lender filing under subdivision 3 
        shall keep and use in the business books, accounts, and records 
        as will enable the commissioner to determine whether the filer 
        is complying with this section. 
           (b) A lender filing under subdivision 3 shall annually on 
        or before March 15 file a report to the commissioner giving the 
        information the commissioner reasonably requires concerning the 
        business and operations during the preceding calendar year.  
           (c) A lender filing under subdivision 3 shall display 
        prominently in each place of business a full and accurate 
        schedule, to be approved by the commissioner, of the charges to 
        be made and the method of computing those charges; furnish a 
        copy of the contract of loan to a person obligated on it or who 
        may become obligated on it at any time upon the request of that 
        person.  This is in addition to any disclosures required by the 
        federal Truth in Lending Act, United States Code, title 15.  
           (d) A lender filing under subdivision 3 shall, upon 
        repayment of the loan in full, mark indelibly every obligation 
        signed by the borrower with the word "Paid" or "Canceled" within 
        20 days after repayment.  
           (e) A lender filing under subdivision 3 shall display 
        prominently, in each licensed place of business, a full and 
        accurate statement of the charges to be made for loans made 
        under this section.  The statement of charges must be displayed 
        in a notice, on plastic or other durable material measuring at 
        least 12 inches by 18 inches, headed "CONSUMER NOTICE REQUIRED 
        BY THE STATE OF MINNESOTA."  The notice shall include, 
        immediately above the statement of charges, the following 
        sentence, or a substantially similar sentence approved by the 
        commissioner:  "These loan charges are higher than otherwise 
        permitted under Minnesota law.  Minnesota law permits these 
        higher charges only because short-term small loans might 
        otherwise not be available to consumers.  If you have another 
        source of a loan, you may be able to benefit from a lower 
        interest rate and other loan charges."  The notice must not 
        contain any other statement or information, unless the 
        commissioner has determined that the additional statement or 
        information is necessary to prevent confusion or inaccuracy.  
        The notice must be designed with a type size that is large 
        enough to be readily noticeable and legible.  The form of the 
        notice must be approved by the commissioner prior to its use. 
           Subd. 5.  [COMPLAINTS ALLEGING VIOLATION.] A person 
        obligated to or having been obligated to a consumer small loan 
        lender filing under subdivision 3 and having reason to believe 
        that this section has been violated may file with the 
        commissioner a written complaint setting forth the details of 
        the alleged violation.  The commissioner, upon receipt of the 
        complaint, may inspect the pertinent books, records, letters, 
        and contracts of the lender and borrower involved.  The 
        commissioner may assess against the lender a fee covering the 
        necessary costs of an investigation under this section.  The 
        commissioner may maintain an action for the recovery of the 
        costs in a court of competent jurisdiction. 
           Subd. 6.  [PENALTIES FOR VIOLATION.] A person or the 
        person's members, officers, directors, agents, and employees who 
        violate or participate in the violation of any of the provisions 
        of this section may be liable in the same manner as in section 
        56.19. 
           Sec. 3.  Minnesota Statutes 1994, section 48.194, is 
        amended to read: 
           48.194 [INSTALLMENT SALES CONTRACTS; LOANS.] 
           A person may enter into a credit sale or service contract 
        for sale to a state or national bank doing business in this 
        state, and a bank may purchase and enforce the contract under 
        the terms and conditions set forth in section 51A.385, 
        subdivisions 2 and 5 to 13 sections 47.59, subdivisions 2 and 4 
        to 14; and 51A.386, subdivision 4.  A state bank or national 
        bank may extend credit pursuant to the terms and conditions set 
        forth in section 51A.385 sections 47.59, 47.60, and 51A.386, 
        subdivision 4. 
           Sec. 4.  Minnesota Statutes 1994, section 51A.02, 
        subdivision 6, is amended to read: 
           Subd. 6.  [ANNUAL PERCENTAGE RATE.] "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. 
           Sec. 5.  Minnesota Statutes 1994, section 51A.02, 
        subdivision 26, is amended to read: 
           Subd. 26.  [FINANCE CHARGE.] "Finance charge" has the 
        meaning given the term 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 
        section 51A.385 47.59 if made for actual unanticipated late 
        payment, delinquency, default, or other similar occurrence, and 
        a charge for an extension or deferment under section 47.59, 
        unless the parties agree that these charges are finance charges; 
           (2) any additional charge under section 51A.385 47.59, 
        subdivision 5 6; or 
           (3) a discount, if an association purchases a contract 
        evidencing a contract credit sale or 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. 
           Sec. 6.  Minnesota Statutes 1994, section 51A.02, 
        subdivision 40, is amended to read: 
           Subd. 40.  [OFFICIAL FEES.] "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 related 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 an 
        association 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. 
           Sec. 7.  Minnesota Statutes 1994, section 51A.19, 
        subdivision 9, is amended to read: 
           Subd. 9.  [MAINTENANCE OF LOAN AND INVESTMENT RECORDS.] 
        Every association shall maintain complete loan and investment 
        records, and shall do so in a manner satisfactory to the 
        commissioner.  Detailed records necessary to make determinations 
        of compliance by an association with the requirements of 
        sections 47.59 and 51A.35 to 51A.385 51A.386, and other 
        provisions of sections 51A.01 to 51A.57 shall be maintained 
        consistently and at all times, the record of each real estate 
        loan or other secured loan or investment containing 
        documentation to the satisfaction of the commissioner of the 
        type, adequacy, and complexion of the security. 
           Sec. 8.  [51A.386] [TERMS AND CONDITIONS OF LOANS, 
        CONTRACTS, AND EXTENSIONS OF CREDIT.] 
           Subdivision 1.  [APPLICATION.] Except as otherwise provided 
        in this section, this section applies to loans made and 
        contracts purchased by federal and state associations, and 
        "association" as used in this section applies to federal and 
        state associations. 
           Subd. 2.  [FINANCE CHARGE FOR CREDIT SALES MADE BY A THIRD 
        PARTY.] A person may enter into a credit sale contract for sale 
        to an association and an association may purchase and enforce a 
        contract evidencing the sale, if the annual percentage rate 
        provided for in the contract does not exceed that permitted in 
        section 47.59 or, in the case of contracts governed by sections 
        168.66 to 168.77, the rates permitted by those sections. 
           Subd. 3.  [FINANCE CHARGE FOR LOANS.] An association may 
        make loans and extend credit at the rates and on the terms 
        provided for in section 47.59. 
           Subd. 4.  [ADDITIONAL AUTHORITY.] Extensions of credit, and 
        purchases of extensions of credit, authorized by sections 47.20, 
        subdivision 1, 3, or 4a; 47.204; 47.21; 47.58; 47.60; 47.69; 
        48.153; 48.185; 48.195; 59A.01 to 59A.15; 168.66 to 168.77; 
        334.01; 334.011; and 334.012 may, but need not, be made 
        according to those sections in lieu of the authority set forth 
        in subdivisions 1 to 3, and if so, are subject to those 
        sections, and not this section, except this subdivision.  An 
        association may also charge an organization a rate of interest 
        and any charges agreed to by the organization and may calculate 
        and collect finance and other charges in any manner agreed to by 
        that organization.  Except for extensions of credit the 
        association elects to make under section 334.01, 334.011, or 
        334.012, chapter 334 does not apply to extensions of credit made 
        according to this section or the sections mentioned in this 
        subdivision. 
           Subd. 5.  [ADDITIONAL CHARGES.] In addition to the finance 
        charges permitted by this section, an association, or a person 
        described in subdivision 2, to the extent not otherwise 
        prohibited by law, may contract for and receive the additional 
        charges that may be included in the amount financed provided for 
        in section 47.59. 
           Sec. 9.  Minnesota Statutes 1994, section 51A.50, is 
        amended to read: 
           51A.50 [FEDERAL ASSOCIATIONS.] 
           The following sections apply to federal associations, 
        except to the extent they are inconsistent with federal law or 
        regulations:  sections 47.59; 51A.01; 51A.02; 51A.065; 51A.15, 
        subdivision 6; 51A.21, subdivisions 6a, 15, 16, 22, 25, 27, and 
        28; 51A.23, subdivision 1; 51A.24; 51A.251; 51A.261; 51A.262; 
        51A.27; 51A.28; 51A.29; 51A.30; 51A.31; 51A.37, subdivisions 1, 
        2, 3, paragraphs (a), (c), (d), 4, 5, 6, 7, 8, 9, 10, 11, and 
        12; 51A.38; 51A.385 51A.386; 51A.40; 51A.50; 51A.52; 51A.56; and 
        51A.57. 
           Sec. 10.  Minnesota Statutes 1994, section 52.04, 
        subdivision 2a, is amended to read: 
           Subd. 2a.  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 51A.385 47.59, subdivisions 2 4 and 5 6 to 
        13 14. 
           Sec. 11.  Minnesota Statutes 1994, section 53.04, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  (a) The right to make loans, secured or 
        unsecured, at the rates and on the terms and other conditions 
        permitted licensees under chapter 56.  Loans made under the 
        authority of section 56.125 in section 47.59.  Loans made under 
        this authority must be in amounts in compliance with section 
        53.05, clause (7).  All other loans made under the authority of 
        chapter 56 must be in amounts in compliance with section 53.05, 
        clause (7), or 56.131, subdivision 1, paragraph (a), whichever 
        is less.  The right to extend credit or lend money and to 
        collect and receive charges therefor as provided by chapter 334, 
        or in lieu thereof to charge, collect, and receive interest at 
        the rate of 21.75 percent per annum, including the right to 
        contract for, charge, and collect all other charges including 
        discount points, fees, late payment charges, and insurance 
        premiums on the loans to the same extent permitted on loans made 
        under the authority of chapter 56, regardless of the amount of 
        the loan.  The provisions of sections 47.20 and 47.21 do not 
        apply to loans made under this subdivision, except as 
        specifically provided in this subdivision.  Nothing in this 
        subdivision is deemed to supersede, repeal, or amend any 
        provision of section 53.05.  A licensee making a loan under this 
        chapter secured by a lien on real estate shall comply with the 
        requirements of section 47.20, subdivision 8.  
           (b) Loans made under this subdivision at a rate of interest 
        not in excess of that provided for in paragraph (a) may be 
        secured by real or personal property, or both.  If the proceeds 
        of a loan secured by a first lien on the borrower's primary 
        residence are used to finance the purchase of the borrower's 
        primary residence, the loan must comply with the provisions of 
        section 47.20.  
           (c) A loan made under this subdivision that is secured by 
        real estate and that is in a principal amount of $7,500 or more 
        and a maturity of 60 months or more may contain a provision 
        permitting discount points, if the loan does not provide a loan 
        yield in excess of the maximum rate of interest permitted by 
        this subdivision.  Loan yield means the annual rate of return 
        obtained by a licensee computed as the annual percentage rate is 
        computed under Federal Regulation Z.  If the loan is prepaid in 
        full, the licensee must make a refund to the borrower to the 
        extent that the loan yield will exceed the maximum rate of 
        interest provided by this subdivision when the prepayment is 
        taken into account.  
           (d) An agency or instrumentality of the United States 
        government or a corporation otherwise created by an act of the 
        United States Congress or a lender approved or certified by the 
        secretary of housing and urban development, or approved or 
        certified by the administrator of veterans affairs, or approved 
        or certified by the administrator of the farmers home 
        administration, or approved or certified by the federal home 
        loan mortgage corporation, or approved or certified by the 
        federal national mortgage association, that engages in the 
        business of purchasing or taking assignments of mortgage loans 
        and undertakes direct collection of payments from or enforcement 
        of rights against borrowers arising from mortgage loans, is not 
        required to obtain a certificate of authorization under this 
        chapter in order to purchase or take assignments of mortgage 
        loans from persons holding a certificate of authorization under 
        this chapter. 
           Sec. 12.  Minnesota Statutes 1994, section 53.04, 
        subdivision 3c, is amended to read: 
           Subd. 3c.  The right to extend credit and make loans under 
        chapter 51A sections 47.59 and 47.60 on the same terms and 
        subject to the same conditions as apply to other lenders under 
        that chapter those sections.  This subdivision does not 
        authorize an industrial loan and thrift company to make loans 
        under a credit card or an overdraft checking plan. 
           Sec. 13.  Minnesota Statutes 1994, section 53.04, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [DISCLOSURE, AUTHORIZED INTEREST, AND OTHER 
        CHARGES.] The documentation of loans made pursuant to this 
        section must include in the promissory note clear reference to 
        the provisions of Minnesota Statutes under which the rate of 
        interest and other charges are authorized.  The references must 
        be to the chapter number in the case of this chapter or chapter 
        56, or to the particular section or sections in the case of 
        chapter 47 or 334.  On loans made under the authority of 
        subdivision 3a and not under the authority of chapter 334, other 
        charges including discount points, fees, late payment charges, 
        and insurance premiums not specifically authorized by this 
        chapter or any other state statute are controlled by chapter 56. 
           Sec. 14.  Minnesota Statutes 1994, section 53.04, 
        subdivision 5a, is amended to read: 
           Subd. 5a.  A person may enter into a credit sale or service 
        contract for sale to an industrial loan and thrift company 
        operating under this chapter in this state, and an industrial 
        loan and thrift company may purchase and enforce the contract 
        under the terms and conditions set forth in section 51A.385, 
        subdivisions 2 and 5 to 13 47.59, subdivisions 2 and 4 to 14. 
           Sec. 15.  Minnesota Statutes 1994, section 56.125, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORIZATION.] A licensee may make 
        open-end loans under this chapter other than loans under a 
        credit card or an overdraft checking plan and may charge a 
        daily, monthly, or other periodic rate of finance charge on 
        unpaid balances not in excess of the maximum rate of interest 
        permitted by section 56.131, subdivision 1, paragraph 
        (a), clause (2) under section 47.59, subdivision 3, paragraph 
        (a), clause (1).  For purposes of this section "open-end loan" 
        means an agreement whereby:  (1) the licensee pursuant to 
        written agreement permits the borrower to obtain advances of 
        money from the licensee from time to time or the licensee 
        advances money on behalf of the borrower from time to time as 
        directed by the borrower; (2) the borrower has the option of 
        paying the balance in full at any time without penalty; (3) the 
        amount of each advance and permitted charges and costs are 
        debited to the borrower's account and payments and other credits 
        are credited to the same account; and (4) the charges are 
        computed on the unpaid principal balance of the account from 
        time to time.  A finance charge imposed on a transaction subject 
        to this section must be computed on:  (1) the previous balance 
        after deducting all payments on accounts received by the 
        licensee during the cycle and all credits to the account during 
        the cycle applicable to any transaction reflected in the 
        previous balance; (2) the average daily balance determined by 
        adding the daily balances on the account for each day in the 
        billing cycle and dividing the total by the number of days in 
        the billing cycle; or (3) daily balances.  The daily balance is 
        figured by taking the beginning balance of the account each day, 
        adding any new advances, subtracting any principal payments or 
        credits, and any unpaid interest.  The average daily balance is 
        calculated by adding together all of the daily balances for the 
        billing cycle, and the sum is then divided by the total number 
        of days in the billing cycle.  A billing cycle is considered to 
        be monthly if the billing dates are on the same day of each 
        month or do not vary by more than four days from that day.  If a 
        licensee makes loans under a credit card plan, it may do so only 
        on the same terms and subject to the same conditions as apply to 
        lenders under section 47.59. 
           Sec. 16.  Minnesota Statutes 1994, section 56.125, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CHARGES.] In addition to the charges authorized 
        in subdivision 1, a licensee may contract for and receive in 
        connection with an open-end loan agreement the additional 
        charges, fees, costs, and expenses with respect to the line of 
        credit limit permitted by sections 47.59, subdivisions 5 and 6, 
        paragraph (a), clause (4); 56.131, subdivisions 1, paragraph 
        (f), clauses (4) and (5), 2, 5, and 6; and 56.155 with respect 
        to other loans, with the following variations:  
           (1) If credit life, disability, or involuntary unemployment 
        insurance is provided and if the insured dies, becomes disabled, 
        or becomes involuntarily unemployed when there is an outstanding 
        open-end loan indebtedness, the amount of the insurance may not 
        exceed the total balance of the loan due on the date of the 
        borrower's death or on the date of the last billing statement in 
        the case of credit life insurance, or all minimum payments which 
        become due on the loan during the covered period of disability 
        in the case of credit disability insurance, or during the 
        covered period of involuntary unemployment in the case of credit 
        involuntary unemployment insurance.  The additional charge for 
        credit life insurance, credit disability insurance, or credit 
        involuntary unemployment insurance must be calculated in each 
        billing cycle by applying the current monthly premium rate for 
        the insurance to the unpaid balances in the borrower's account.  
           (2) The amount, terms, and conditions of any credit 
        insurance against loss or damage to property must be reasonable 
        in relation to the character and value of the property insured.  
           Sec. 17.  Minnesota Statutes 1994, 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 $35,000 $56,000 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, calculated according to the 
        actuarial method, not exceeding the equivalent of the greater of 
        any of the following: 
           (1) the total of:  (i) 33 percent per year on that part of 
        the unpaid balance of the principal amount not exceeding $750; 
        and (ii) 19 percent per year on that part of the unpaid balance 
        of the principal amount exceeding $750; or 
           (2) 21.75 percent per year on the unpaid balance of the 
        principal amount finance charges, and other charges as provided 
        in section 47.59. 
           (b) On any loan where interest has been calculated 
        according to the method provided for in paragraph (a), clause 
        (1), interest must be contracted for and earned as provided in 
        that provision or at the single annual percentage rate computed 
        to the nearest 1/100 of one percent that would earn the same 
        total interest at maturity of the contract as would be earned by 
        the application of the graduated rates provided in paragraph 
        (a), clause (1), when the debt is paid according to the agreed 
        terms and the calculations are made according to the actuarial 
        method.  
           (c) (b) Loans may be interest-bearing or precomputed. 
           (d) (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.  
           (e) (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 
        (f) (e), clause (3).  The resulting loan contract is deemed a 
        new and separate loan transaction for all purposes. 
           (f) (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) When any loan contract is paid in full by cash, renewal 
        or refinancing, or a new loan, one month or more before the 
        final installment due date, a licensee shall refund or credit 
        the borrower with the total of the applicable charges for all 
        fully unexpired installment periods, as originally scheduled or 
        as deferred, which follow the day of prepayment; if the 
        prepayment is made other than on a scheduled payment date, the 
        nearest scheduled installment payment date must be used in the 
        computation; provided further, if the prepayment occurs prior to 
        the first installment due date, the licensee may retain 1/30 of 
        the applicable charge for a first installment period of one 
        month for each day from the date of the loan to the date of 
        prepayment, and shall refund or credit the borrower with the 
        balance of the total interest contracted for.  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 an installment, other than the final installment, is 
        not paid in full within ten days of its scheduled due date, a 
        licensee may contract for and receive a default charge not 
        exceeding five percent of the amount of the installment, but not 
        less than $4. 
           A default charge under this subdivision may not be 
        collected on an installment paid in full within ten days of its 
        scheduled due date, or deferred installment due date with 
        respect to deferred installments, even though a default or 
        deferral charge on an earlier installment has not been paid in 
        full.  A default charge may be collected at the time it accrues 
        or at any time thereafter. 
           (5) If the parties agree in writing, either in the loan 
        contract or in a subsequent agreement, to a deferment of wholly 
        unpaid installments, a licensee may grant a deferment and may 
        collect a deferment charge as provided 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 for 
        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.  Should a loan be 
        prepaid in full during a deferment period, the licensee 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 in full. 
           (6) (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. 
           (7) (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 (6) (4), 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.  
           (8) (6) 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. 
           Sec. 18.  Minnesota Statutes 1994, section 56.131, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ADDITIONAL CHARGES.] In addition to the charges 
        provided for by this section and section 56.155, and 
        notwithstanding section 47.59, subdivision 5, to the contrary, 
        no further or other amount whatsoever, shall be directly or 
        indirectly charged, contracted for, or received for the loan 
        made, except actual out of pocket expenses of the licensee to 
        realize on a security after default, and except for the 
        following additional charges which may be included in the 
        principal amount of the loan:  
           (a) lawful fees and taxes paid to any public officer to 
        record, file, or release security; 
           (b) with respect to a loan secured by an interest in 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; provided the costs do not exceed one 
        percent of the principal amount or $250 $400, whichever is 
        greater: 
           (1) fees or premiums for title examination, abstract of 
        title, title insurance, surveys, or similar purposes; 
           (2) fees, if not paid to the licensee, an employee of the 
        licensee, or a person related to the licensee, for preparation 
        of a mortgage, settlement statement, or other documents, fees 
        for notarizing mortgages and other documents, and appraisal 
        fees; 
           (c) the premium for insurance in lieu of perfecting and 
        releasing a security interest to the extent that the premium 
        does not exceed the fees described in paragraph (a); 
           (d) discount points and appraisal fees may not be included 
        in the principal amount of a loan secured by an interest in real 
        estate when the loan is a refinancing for the purpose of 
        bringing the refinanced loan current and is made within 24 
        months of the original date of the refinanced loan.  For 
        purposes of this paragraph, a refinancing is not considered to 
        be for the purpose of bringing the refinanced loan current if 
        new funds advanced to the customer, not including closing costs 
        or delinquent installments, exceed $1,000.  
           Sec. 19.  Minnesota Statutes 1994, section 56.132, is 
        amended to read: 
           56.132 [INSTALLMENT SALES CONTRACTS.] 
           A person may enter into a credit sale or service contract 
        for sale to a licensee under this chapter doing business in this 
        state, and a licensee may purchase and enforce the contract 
        under the terms and conditions set forth in section 51A.385, 
        subdivisions 2 and 5 to 13 47.59, subdivisions 2 and 4 to 14. 
           Sec. 20.  Minnesota Statutes 1994, section 56.155, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORIZATION.] Notwithstanding section 
        47.59 to the contrary, no licensee shall, directly or 
        indirectly, sell or offer for sale any insurance in connection 
        with any loan made under this chapter except as and to the 
        extent authorized by this section.  The sale of credit life, 
        credit accident and health, and credit involuntary unemployment 
        insurance is subject to the provisions of chapter 62B, except 
        that the term of the insurance may exceed 60 months if the term 
        of the loan exceeds 60 months.  Life, accident, health, and 
        involuntary unemployment insurance, or any of them, may be 
        written upon or in connection with any loan but must not be 
        required as additional security for the indebtedness.  If the 
        debtor chooses to procure credit life insurance, credit accident 
        and health insurance, or credit involuntary unemployment 
        insurance as security for the indebtedness, the debtor shall 
        have the option of furnishing this security through existing 
        policies of insurance that the debtor owns or controls, or of 
        furnishing the coverage through any insurer authorized to 
        transact business in this state.  A statement in substantially 
        the following form must be made orally, except for loans by mail 
        pursuant to section 56.12, and provided in writing in bold face 
        type of a minimum size of 12 points to the borrower before the 
        transaction is completed for each credit life, accident and 
        health, and involuntary unemployment insurance coverage sold: 
           CREDIT LIFE INSURANCE, CREDIT DISABILITY INSURANCE, AND 
           CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE ARE NOT REQUIRED 
           TO OBTAIN CREDIT.  YOU MAY BUY ANY INSURANCE FROM ANYONE 
           YOU CHOOSE OR YOU MAY USE EXISTING INSURANCE.  
           The licensee shall disclose whether or not the benefits 
        commence as of the first day of disability or involuntary 
        unemployment and shall further disclose the number of days that 
        an insured obligor must be disabled or involuntarily unemployed, 
        as defined in the policy, before benefits, whether retroactive 
        or nonretroactive, commence.  In case there are multiple 
        obligors under a transaction subject to this chapter, no policy 
        or certificate of insurance providing credit unemployment 
        benefits may be procured by or through a licensee upon more than 
        one of the obligors.  In case there are multiple obligors under 
        a transaction subject to this chapter, no policy or certificate 
        of insurance providing credit accident and health or credit life 
        insurance may be procured by or through a licensee upon more 
        than two of the obligors in which case they shall be insured 
        jointly.  The premium or identifiable charge for the insurance 
        must not exceed that filed by the insurer with the department of 
        commerce.  The charge, computed at the time the loan is made for 
        a period not to exceed the full term of the loan contract on an 
        amount not to exceed the total amount required to pay principal 
        and charges, may be deducted from the proceeds or may be 
        included as part of the principal of any loan.  If a borrower 
        procures insurance by or through a licensee, the statement 
        required by section 56.14 must disclose the cost to the borrower 
        and the type of insurance, and the licensee shall cause to be 
        delivered to the borrower a copy of the policy, certificate, or 
        other evidence thereof, within a reasonable time.  No licensee 
        shall decline new or existing insurance which meets the 
        standards set out in this section nor prevent any obligor from 
        obtaining this insurance coverage from other sources.  
        Notwithstanding any other provision of this chapter, any gain or 
        advantage to the licensee or to any employee, affiliate, or 
        associate of the licensee from this insurance or the sale or 
        provision thereof is not an additional or further charge in 
        connection with the loan; nor are any of the provisions 
        pertaining to insurance contained in this section prohibited by 
        any other provision of this chapter. 
           Sec. 21.  [334.171] [OPEN END CREDIT PLANS; DELINQUENCIES 
        AND COLLECTION CHARGES.] 
           If an open end credit plan, agreement, or arrangement 
        between the buyer and seller so provides, a seller or holder may 
        collect a delinquency and collection charge on each installment 
        in arrears for a period of not less than ten days in an amount 
        not in excess of any such charge which may be imposed on 
        residents of this state by any institution defined in subsection 
        (c)(2)(F) of section 101(a) of the Competitive Equality 
        Amendments of 1987 and the Bank Holding Company Act of 1956, 
        United States Code, title 12, section 1841(c)(2)(F), by any 
        national banking association under section 85 of the National 
        Bank Act of 1864, United States Code, title 12, section 85, or 
        by any state chartered insured depository institution under 
        section 521 of the Depository Institutions Deregulation and 
        Monetary Control Act of 1980, United States Code, title 12, 
        section 1813d(a). 
           Sec. 22.  [REPEALER.] 
           Minnesota Statutes 1994, sections 51A.385; and 325F.91, 
        subdivision 2, are repealed. 
                                   ARTICLE 4 
                INTERSTATE MARKET DEVELOPMENT AND FEDERALIZATION 
                             OF INTERSTATE BANKING 
           Section 1.  Minnesota Statutes 1994, section 46.048, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIREMENT.] Whenever a change in the 
        outstanding voting stock of a banking institution will result in 
        control or in a change in the control of the banking 
        institution, the person acquiring control of the banking 
        institution, including an out-of-state bank holding company, 
        shall file notice of the proposed acquisition of control with 
        the commissioner of commerce at least 60 days before the actual 
        effective date of the change, except that the commissioner may 
        extend the 60-day period an additional 30 days if in the 
        commissioner's judgment any material information submitted is 
        substantially inaccurate or the acquiring party has not 
        furnished all the information required.  As used in this 
        section, the term "control" means the power to directly or 
        indirectly direct or cause the direction of the management or 
        policies of the banking institution.  A change in ownership of 
        capital stock that would result in direct or indirect ownership 
        by a stockholder or an affiliated group of stockholders of less 
        than 25 percent of the outstanding capital stock is not 
        considered a change of control.  If there is any doubt as to 
        whether a change in the outstanding voting stock is sufficient 
        to result in control or to effect a change in the control, the 
        doubt shall be resolved in favor of reporting the facts to the 
        commissioner.  The commissioner shall use the criteria 
        established by the Financial Institution Regulatory and Interest 
        Rate Control Act of 1978, United States Code, title 12, section 
        1817(j), and the regulations adopted under it, when reviewing 
        the acquisition and determining if the acquisition should or 
        should not be disapproved.  Within three days after making the 
        decision to disapprove a proposed acquisition, the commissioner 
        shall notify the acquiring party in writing of the disapproval.  
        The notice must provide a statement of the basis for the 
        disapproval. 
           Sec. 2.  Minnesota Statutes 1994, section 46.048, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [CONTENTS.] The notice required by subdivision 1 
        must contain the following information to the extent that it is 
        known by the person making the notice:  
           (1) the identity, personal history, business background, 
        and experience of each person by whom or on whose behalf the 
        acquisition is to be made, including the person's material 
        business activities and affiliations during the past five years, 
        and a description of any material pending legal or 
        administrative proceedings in which the person is a party and 
        any criminal indictment or conviction of that person by a state 
        or federal court; 
           (2) a statement of the assets and liabilities of each 
        person by whom or on whose behalf the acquisition is to be made, 
        as of the end of the fiscal year for each of the five years 
        immediately preceding the date of the notice, together with 
        related statements of income, sources, and application of funds 
        for each of the fiscal years then concluded, all prepared in 
        accordance with generally accepted accounting principles 
        consistently applied, and an interim statement of the assets and 
        liabilities for each person, together with related statements of 
        income, source, and application of funds as of a date not more 
        than 90 days before the date of the filing of the notice; 
           (3) the terms and conditions of the proposed acquisition 
        and the manner in which the acquisition is to be made; 
           (4) the identity, source, and amount of the funds or other 
        consideration to be used in making the acquisition, and if any 
        part of these funds or other consideration has been or is to be 
        borrowed or otherwise obtained for the purpose of making the 
        acquisition, a description of the transaction, the names of the 
        parties, and any arrangements, agreements, or understandings 
        with those persons; 
           (5) any plans or proposals that a party making the 
        acquisition may have to liquidate the bank, to sell its assets 
        or merge it, or make any other major change in its business or 
        corporate structure or management; 
           (6) the identity of any person employed, retained, or to be 
        compensated by the acquiring party, or by any person on the 
        acquiring party's behalf, to make solicitations or 
        recommendations to stockholders for the purpose of assisting in 
        the acquisition, and a brief description of the terms of the 
        employment, retainer, or arrangement for compensation; 
           (7) copies of all invitations, tenders, or advertisements 
        making tender offers to stockholders for purchase of their stock 
        to be used in connection with the proposed acquisition; and 
           (8) any additional relevant information in the form the 
        commissioner requires by rule or by specific request in 
        connection with any particular notice. 
           Sec. 3.  Minnesota Statutes 1994, section 46.048, is 
        amended by adding a subdivision to read: 
           Subd. 2b.  [NOTICE.] Upon the filing of an application:  
           (1) an applicant shall publish once in a newspaper of 
        general circulation notice of the proposed acquisition in a form 
        acceptable to the commissioner; and 
           (2) the commissioner shall accept public comment on an 
        application for a period of not less than 30 days from the date 
        of the publication required by clause (1). 
           Sec. 4.  Minnesota Statutes 1994, section 46.048, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [HEARINGS.] Within ten days of receipt of notice 
        of disapproval according to subdivision 1, the acquiring party 
        may request a department hearing on the proposed acquisition.  
        At the hearing, all issues must be determined on the record 
        according to chapter 14 and the rules adopted by the 
        commissioner.  At the conclusion of the hearing, the 
        commissioner shall by order approve or disapprove the proposed 
        acquisition on the basis of the record made at the hearing. 
           Sec. 5.  Minnesota Statutes 1994, section 47.52, is amended 
        to read: 
           47.52 [AUTHORIZATION.] 
           (a) With the prior approval of the commissioner, any bank 
        doing business in this state may establish and maintain not more 
        than five detached facilities provided the facilities are 
        located within the municipality in which the principal office of 
        the applicant bank is located; or within 5,000 feet of its 
        principal office measured in a straight line from the closest 
        points of the closest structures involved; or within 100 miles 
        of its principal office measured in a straight line from the 
        closest points of the closest structures involved, if the 
        detached facility is within any municipality in which no bank is 
        located at the time of application or if the detached facility 
        is in a municipality having a population of more than 10,000, or 
        if the detached facility is located in a municipality having a 
        population of 10,000 or less, as determined by the commissioner 
        from the latest available data from the state demographer, or 
        for municipalities located in the seven-county metropolitan area 
        from the metropolitan council, and all the banks having a 
        principal office in the municipality have consented in writing 
        to the establishment of the facility. 
           (b) A detached facility shall not be closer than 50 feet to 
        a detached facility operated by any other bank and shall not be 
        closer than 100 feet to the principal office of any other bank, 
        the measurement to be made in the same manner as provided 
        above.  This paragraph shall not be applicable if the proximity 
        to the facility or the bank is waived in writing by the other 
        bank and filed with the application to establish a detached 
        facility. 
           (c) Any bank is allowed, in addition to other facilities, 
        one drive-in or walk-up facility located between 150 to 1,500 
        feet of the main banking house or within 1,500 feet from a 
        detached facility.  The drive-in or walk-up facility permitted 
        by this clause is subject to paragraph (b) and section 47.53. 
           (d) A bank whose home state is Minnesota as defined in 
        section 48.92 is allowed, in addition to facilities otherwise 
        permitted, to establish and operate a de novo detached facility 
        in a location in the host states of Iowa, North Dakota, South 
        Dakota, and Wisconsin not more than 30 miles from its principal 
        office measured in a straight line from the closest points of 
        the closest structures involved and subject to requirements of 
        sections 47.54 and 47.561 and the following additional 
        requirements and conditions: 
           (1) there is in effect in the host state a law, rule, or 
        ruling that permits Minnesota home state banks to establish de 
        novo branches in the host state under conditions substantially 
        similar to those imposed by the laws of Minnesota as determined 
        by the commissioner; and 
           (2) there is in effect a cooperative agreement between the 
        home and host state banking regulators to facilitate their 
        respective regulation and supervision of the bank including the 
        coordination of examinations. 
           For purposes of this paragraph, "host state" means a state 
        other than the home state, as defined in section 48.92. 
           Sec. 6.  Minnesota Statutes 1994, section 47.78, is amended 
        to read: 
           47.78 [CONTRACTS TO ACCEPT AND RECEIVE DEPOSITS-HONOR AND 
        PAY WITHDRAWALS.] 
           (a) Notwithstanding any other law to the contrary, a 
        financial institution, the "customer institution," may contract 
        with another financial institution, the "service institution," 
        to grant the service institution the authority to render 
        services to the customer institution's depositors, borrowers or 
        other customers, provided notice of the proposed contract is 
        given to the commissioner and the commissioner does not object 
        to the contract within 30 days of the notice. 
           (b) For purposes of this section:  "Financial institution" 
        means a national banking association, federal savings and loan 
        association, or federal credit union having its main office in 
        this state, or a bank, savings bank, savings and loan 
        association, or credit union established and operating under the 
        laws of this state; and "services" means accepting and receiving 
        deposits, honoring and paying withdrawals, issuing money orders, 
        cashiers' checks, and travelers' checks or similar instruments, 
        cashing checks or drafts, receiving loan payments, receiving or 
        delivering cash and instruments and securities, disbursing loan 
        proceeds by machine, and any other transactions authorized by 
        section 47.63. 
           The term also includes a bank subsidiary of a bank holding 
        company or affiliated savings association to the extent agency 
        activities are permitted under section 18 of the Federal Deposit 
        Insurance Act, United States Code, title 12, section 1828, as 
        amended, effective September 29, 1995, and title I, Riegle-Neal 
        Interstate Banking and Branching Efficiency Act of 1994. 
           (c) A contract entered into pursuant to this section may 
        include authority to conduct transactions at or through any 
        principal office, branch, or detached facility of either 
        financial institution which is a party to the contract, and the 
        service institution is not considered a branch of the customer 
        institution for purposes of section 48.34. 
           Sec. 7.  Minnesota Statutes 1994, section 48.90, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SEVERABILITY.] It is the express intention 
        of the Minnesota legislature to act pursuant to the United 
        States Code, title 12, section 1842(d) to provide an orderly 
        transition to interstate banking by initially permitting limited 
        interstate banking on a regional basis as amended by title I of 
        the Riegle-Neal Interstate Banking and Branching Efficiency Act 
        of 1994 to provide for interstate banking on a nationwide basis 
        and to preserve certain state law, policy, and practices.  
        Therefore, notwithstanding the provisions of section 645.20, if 
        any provision of Laws 1986, chapter 339, other than Laws 1986, 
        chapter 339, sections 1 to 3, and 14, providing for the 
        supervisory powers of the commissioner or limiting expansion 
        into this state to bank holding companies located in states 
        defined as "reciprocating states" is determined by final, 
        nonappealable order of any Minnesota or federal court of 
        competent jurisdiction to be invalid or unconstitutional, Laws 
        1986, chapter 339, is null and void and of no further force and 
        effect from the effective date of the final determination.  
           Sec. 8.  Minnesota Statutes 1994, section 48.91, is amended 
        to read: 
           48.91 [TITLE.] 
           Laws 1986, chapter 339 Sections 48.90 to 48.99 may be cited 
        as the "reciprocal interstate banking act."  
           Sec. 9.  Minnesota Statutes 1994, section 48.92, 
        subdivision 2, is amended to read: 
           Subd. 2.  [CONTROL.] "Control," means, with respect to a 
        bank holding company, bank, or bank to be organized pursuant to 
        chapters 46, 47, 48, and 300, (1) the ownership, directly or 
        indirectly or acting through one or more other persons, control 
        of or the power to vote 25 percent or more of any class of 
        voting securities; (2) control in any manner over the election 
        of a majority of the directors; or (3) the power to exercise, 
        directly or indirectly, a controlling influence over management 
        and policies means that term as defined in section 46.048, 
        subdivision 1. 
           Sec. 10.  Minnesota Statutes 1994, section 48.92, 
        subdivision 6, is amended to read: 
           Subd. 6.  [LOCATED IN THIS HOME STATE.] "Located in 
        this Home state" means:  (1) a bank whose organizational 
        certificate identifies an address in this state as the principal 
        place of conducting the business of banking; or (2) a bank 
        holding company as defined in the Bank Holding Company Act of 
        1956, as amended, with banking subsidiaries, the majority of 
        whose deposits are in Minnesota. with respect to a national 
        bank, the state in which the main office of the bank is located; 
        (2) with respect to a state bank, the state by which the bank is 
        chartered; and (3) with respect to a bank holding company, the 
        state in which the total deposits of all banking subsidiaries of 
        the company are the largest on the later of (i) July 1, 1966, or 
        (ii) the date on which the company becomes a bank holding 
        company under the Bank Holding Company Act of 1956, as amended, 
        United States Code, title 12, section 1842. 
           Sec. 11.  Minnesota Statutes 1994, section 48.92, 
        subdivision 7, is amended to read: 
           Subd. 7.  [RECIPROCATING HOST STATE.] "Reciprocating Host 
        state" is a state that authorizes the acquisition, directly or 
        indirectly, or control of, banks in that state by a bank or bank 
        holding company located in this state under conditions 
        substantially similar to those imposed by the laws of Minnesota 
        as determined by the commissioner. other than the home state of 
        the bank holding company, in which the company controls, or 
        seeks to control, a bank subsidiary. 
           Sec. 12.  Minnesota Statutes 1994, section 48.92, 
        subdivision 8, is amended to read: 
           Subd. 8.  [RECIPROCATING STATE OUT-OF-STATE BANK HOLDING 
        COMPANY.] "Reciprocating state Out-of-state bank holding 
        company" means a bank holding company as defined in the Bank 
        Holding Company Act of 1956, as amended, whose operations are 
        principally conducted in a reciprocating home state is a state 
        other than Minnesota and is that state in which the operations 
        of its banking subsidiaries are the largest in terms of total 
        deposits. 
           Sec. 13.  Minnesota Statutes 1994, section 48.92, 
        subdivision 9, is amended to read: 
           Subd. 9.  [INTERSTATE BANK HOLDING COMPANY.] "Interstate 
        bank holding company" means (a) a bank holding company located 
        in this state, whose home state is Minnesota and that is 
        engaging in interstate banking under reciprocal 
        legislation, and (b) a reciprocating state an out-of-state bank 
        holding company engaged in banking in this state, and (c) other 
        out-of-state bank holding companies operating an institution 
        located in this state having deposits insured by the Federal 
        Deposit Insurance Corporation. 
           Sec. 14.  Minnesota Statutes 1994, section 48.92, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [OUT-OF-STATE BANK.] "Out-of-state bank" means a 
        bank whose home state is other than Minnesota. 
           Sec. 15.  Minnesota Statutes 1994, section 48.93, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION.] A reciprocating state An 
        out-of-state bank holding company may, through a purchase of 
        stock or assets of a bank, or through a purchase of stock or 
        assets of or merger with a bank holding company, acquire an 
        interest control in an existing bank or banks located in this 
        whose home state is Minnesota if it meets the conditions in this 
        section, sections 46.047 and 46.048 and, if the interest will 
        result in control of the bank or banks, it files an application 
        in writing with the commissioner on forms provided by the 
        department.  The commissioner, upon receipt of the application, 
        shall act upon it within 30 days of the end of the public 
        comment period provided by section 48.98, and, unless the 
        proposed acquisition is disapproved within that period of time, 
        it becomes effective without approval in the manner provided for 
        in sections 46.047 and 46.048, except that the commissioner may 
        extend the 30-day 60-day period an additional 30 days if in the 
        commissioner's judgment any material information submitted is 
        substantially inaccurate or the acquiring party has not 
        furnished all the information required by subdivision 3 statute, 
        rule, or the commissioner.  No application for approval required 
        by this section is complete unless accompanied by an application 
        fee of $5,000 payable to the state treasurer.  Compliance with 
        the requirements of this section satisfies the requirements of 
        section 48.03, subdivision 4.  Within three days after making 
        the decision to disapprove any proposed acquisition, the 
        commissioner shall notify the acquiring party in writing of the 
        disapproval.  The notice must provide a statement of the basis 
        for the disapproval.  
           Sec. 16.  Minnesota Statutes 1994, section 48.93, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CRITERIA FOR APPROVAL.] Except as otherwise 
        provided by rule of the department, an application filed 
        pursuant to subdivision 1 must contain the following 
        information: required by sections 46.047 and 46.048. 
           (1) the identity, personal history, business background, 
        and experience of each person by whom or on whose behalf the 
        acquisition is to be made, including the person's material 
        business activities and affiliations during the past five years, 
        and a description of any material pending legal or 
        administrative proceedings in which the person is a party and 
        any criminal indictment or conviction of that person by a state 
        or federal court; 
           (2) a statement of the assets and liabilities of each 
        person by whom or on whose behalf the acquisition is to be made, 
        as of the end of the fiscal year for each of the five years 
        immediately preceding the date of the notice, together with 
        related statements of income, sources, and application of funds 
        for each of the fiscal years then concluded, all prepared in 
        accordance with generally accepted accounting principles 
        consistently applied, and an interim statement of the assets and 
        liabilities for each person, together with related statements of 
        income, source, and application of funds as of a date not more 
        than 90 days prior to the date of the filing of the notice; 
           (3) the terms and conditions of the proposed acquisition 
        and the manner in which the acquisition is to be made; 
           (4) the identity, source, and amount of the funds or other 
        consideration to be used in making the acquisition, and if any 
        part of these funds or other consideration has been or is to be 
        borrowed or otherwise obtained for the purpose of making the 
        acquisition, a description of the transaction, the names of the 
        parties, and any arrangements, agreements, or understandings 
        with those persons; 
           (5) any plans or proposals which an acquiring party making 
        the acquisition may have to liquidate the bank, to sell its 
        assets or merge it, or make any other major change in its 
        business or corporate structure or management; 
           (6) the identification of any person employed, retained, or 
        to be compensated by the acquiring party, or by any person on 
        the acquiring party's behalf, to make solicitations or 
        recommendations to stockholders for the purpose of assisting in 
        the acquisition, and a brief description of the terms of the 
        employment, retainer, or arrangement for compensation; 
           (7) copies of all invitations, tenders, or advertisements 
        making tender offers to stockholders for purchase of their stock 
        to be used in connection with the proposed acquisition; 
           (8) a statement of how the acquisition will bring "net new 
        funds" to Minnesota.  The description of net new funds must be 
        filed with the application stating the amount of capital funds, 
        including the increase in equity capital that will result from 
        the acquisition or establishment of a bank.  The level of total 
        equity capital must exceed $3,000,000 for a new chartered bank 
        and $1,000,000 for an acquired bank.  The description must state 
        the net increase in loanable funds expressed as an increase in 
        the total loan to asset ratio of Minnesota loans and assets.  
        The statement must also include a discussion of initial capital 
        investments, loan policy, investment policy, dividend policy, 
        and the general plan of business, including the full range of 
        consumer and business services which will be offered; and 
           (9) any additional relevant information in the form the 
        commissioner requires by rule or by specific request in 
        connection with any particular notice.  
           Sec. 17.  Minnesota Statutes 1994, section 48.93, 
        subdivision 4, is amended to read: 
           Subd. 4.  [DISAPPROVAL.] The commissioner shall disapprove 
        any proposed acquisition if:  
           (1) the financial condition of any acquiring person is such 
        as might jeopardize the financial stability of the bank or 
        prejudice the interests of the depositors of the bank; 
           (2) the competence, experience, integrity of any acquiring 
        person or of any of the proposed management personnel indicates 
        that it would not be in the interest of the depositors of the 
        bank, or in the interest of the public to permit the person to 
        control the bank; 
           (3) the acquisition will result in undue concentration of 
        resources or substantial lessening of competition in this state; 
           (4) the application fails to adequately demonstrate that 
        the acquisition proposal would bring net new funds into 
        Minnesota; 
           (5) the application is incomplete or any acquiring party 
        neglects, fails, or refuses to furnish all the information 
        required by the commissioner; 
           (6) (5) a subsidiary of the acquiring bank holding company 
        has failed to meet the requirements set forth in the federal 
        Community Reinvestment Act; or 
           (7) the acquisition will result in over 30 percent of 
        Minnesota's total deposits in financial institutions as defined 
        in section 13A.01, subdivision 2, being held by banks located in 
        this state owned by reciprocating state bank holding companies.  
        This limitation does not apply to consideration for approval 
        pursuant to section 48.99, special acquisitions.  
           (6) the bank to be acquired has not been in existence for 
        at least five years.  For purposes of this paragraph, a bank 
        that has been chartered solely for the purpose of, and does not 
        open for business before, acquiring control of, or acquiring all 
        or substantially all of the assets of, an existing bank is 
        considered to have been in existence for the same period of time 
        as the bank to be acquired.  For determining the time period of 
        existence of a bank, the time period begins after the issuance 
        of a certificate of authorization and from the date the approved 
        bank actually opens for business. 
           Sec. 18.  Minnesota Statutes 1994, section 48.96, is 
        amended to read: 
           48.96 [SUPERVISION.] 
           The department may enter into cooperative and reciprocal 
        agreements with federal or bank state regulatory authorities of 
        reciprocating states responsible for supervision of out-of-state 
        bank holding companies for exchange or acceptance of reports of 
        examination and other records from the authorities in lieu of 
        conducting its own examinations.  The department may enter into 
        joint actions with federal or bank state regulatory authorities 
        of reciprocating states responsible for supervision of 
        out-of-state bank holding companies to carry out its 
        responsibilities under Laws 1986, chapter 339 and assure 
        compliance with the laws of this state. 
           Sec. 19.  Minnesota Statutes 1994, section 48.99, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION CRITERIA FOR APPROVAL.] 
        Pursuant to the present requirement of the United States Code, 
        title 12, section 1842(d) and notwithstanding any other 
        provision of state law, a reciprocating state an out-of-state 
        bank holding company, or any subsidiary of a bank holding 
        company, may acquire a bank located in this state where the 
        commissioner has determined that a merger, consolidation, or 
        purchase of assets and assumption of liabilities is necessary 
        and in the public interest to prevent the probable failure of a 
        bank or is made for the incorporation of a new bank in the same 
        locality coincidental with the closing of an existing bank by 
        the commissioner or federal authorities and does not increase 
        the number of banks in the community affected.  The acquisition 
        is subject to the prior written approval of the commissioner of 
        an application submitted under this section and after the 
        following considerations:  
           (1) the financial and managerial resources of the 
        applicant; 
           (2) the future prospects of the applicant and the state 
        bank or its subsidiary whose assets, interest in, or shares it 
        will acquire; 
           (3) the financial history of the applicant; 
           (4) whether the acquisition or holding may result in undue 
        concentration of resources or substantial lessening of 
        competition in this state, but any deposit concentration 
        limitations imposed on the acquisition by Public Law Number 
        103-328, title 1, section 101, (a)(2), may be waived by order of 
        the commissioner; 
           (5) the convenience and needs of the public of this state; 
        and 
           (6) whether the acquisition or holding will strengthen the 
        financial condition of the state bank.  
           Sec. 20.  [48.993] [RECIPROCAL INTERSTATE BRANCHING.] 
           With the prior approval of the commissioner, a bank doing 
        business in the state of Iowa, North Dakota, South Dakota, or 
        Wisconsin may establish a de novo detached facility in this 
        state not more than 30 miles from its principal office measured 
        in a straight line from the closest points of the closest 
        structures provided further that:  
           (a) There is in effect in the home state a statute, rule, 
        or ruling that permits Minnesota home state banks to establish 
        de novo branches in the state under conditions substantially 
        similar to those imposed by the laws of Minnesota as determined 
        by the commissioner.  
           (b) There is in effect a cooperative agreement between the 
        home state and host state banking regulator to facilitate their 
        respective regulation and supervision of the bank including 
        application and approval process, and the coordination of 
        examinations.  The agreement must at a minimum provide:  
           (1) common form and information requirements to be 
        completed by the applicant bank; 
           (2) common form and procedure required to publish the 
        application in the location of the branch in the host state; 
           (3) a fee for the application to the state of Minnesota, 
        department of commerce, for filing and approval as the host 
        state of the application of $500; 
           (4) the requirements and limitations on the location and 
        operations of an interstate branch must be the same as for host 
        state branches in sections 47.51 to 47.55.  Transfer of location 
        under section 47.56 is limited by this section; 
           (5) the branch is subject to the laws of the host state 
        relating to banking in resolution of conflicts of laws between 
        the home and host state; and 
           (6) the deposits of the bank must be insured by the Federal 
        Deposit Insurance Corporation. 
           (c) The home state banking regulator has granted any and 
        all necessary approvals.  
           (d) Beginning one year following establishment of a 
        detached facility in a host state, the home state bank's level 
        of lending in the host state relative to the deposits from the 
        host state shall not be less than half of the level of the 
        bank's loan to deposit ratio in its home state operations.  The 
        bank shall maintain sufficient records to permit an examination 
        to determine compliance with this requirement by the host state 
        banking regulator.  If the bank is found to be in noncompliance, 
        the home state or host state banking regulator may order that an 
        interstate branch of the bank in the host state be closed. 
           (e) For purposes of this section, "home state" has the 
        meaning given in section 48.92, and "host state" means a state 
        other than the home state. 
           Sec. 21.  [48.995] [FOREIGN CORPORATION FILING.] 
           Subdivision 1.  [TRUST POWERS.] A bank that holds trust 
        powers may conduct the activity through a host state branch 
        provided it complies with section 303.25.  
           Subd. 2.  [FILING WITH SECRETARY OF STATE.] Notwithstanding 
        section 303.03, the branch in a host state must operate under a 
        certificate of authority filed with the Minnesota secretary of 
        state. 
           Subd. 3.  [DEFINITION.] For purposes of this section, "host 
        state" means a state other than the home state, as defined in 
        section 48.92. 
           Sec. 22.  Minnesota Statutes 1994, section 52.05, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPLICATION.] Any 25 residents of the state 
        persons representing a group may apply to the commissioner, 
        advising the commissioner of the common bond of the group and 
        its number of potential members, for a determination whether it 
        is feasible for the group to form a credit union.  Upon a 
        determination that it is not feasible to organize because the 
        number of potential members is too small, the applicants will be 
        certified by the commissioner as eligible to petition for 
        membership in an existing credit union capable of serving the 
        group.  If the credit union so petitioned resolves to accept the 
        group into membership, it shall follow the bylaw amendment and 
        approval procedure set forth in section 52.02.  
           The commissioner shall adopt rules to implement this 
        subdivision.  These rules must provide that: 
           (1) for the purpose of this subdivision, groups with a 
        potential membership of less than 1,500 will be considered too 
        small to be feasible as a separate credit union, unless there 
        are compelling reasons to the contrary, relevant to the 
        objectives of this subdivision; 
           (2) groups with a potential membership in excess of 1,500 
        will be considered in light of all circumstances relevant to the 
        objectives of this subdivision; and 
           (3) all group applications, except for applications from 
        groups made up of members of existing credit unions or groups 
        made up of people who have a common employer which qualifies 
        them for membership in an existing credit union, will be 
        considered separately from any consideration of the membership 
        provisions of existing credit unions; except that, groups made 
        up of members of an existing credit union may be certified under 
        this subdivision with the agreement of the credit union. 
           Sec. 23.  [NONSEVERABILITY.] 
           Notwithstanding Minnesota Statutes, section 645.20, if any 
        section, subdivision, clause, phrase, or word of section 5, 
        paragraph (d), section 20, or section 21 is for any reason 
        determined by a final nonappealable order or judgment of a court 
        of competent jurisdiction to be unconstitutional, in violation 
        of federal law, or to constitute opting-in to de novo interstate 
        branching under section 103 of the federal Riegle-Neal 
        Interstate Banking and Branching Efficiency Act of 1994, the 
        determination shall cause the remaining portions of those 
        sections, subdivisions, clauses, and phrases to be null and void 
        from the effective date of the final determination. 
           Sec. 24.  [SUNSET.] 
           Sections 5, 20, and 21 expire May 31, 1997. 
           Sec. 25.  [IMMEDIATE REPEALER.] 
           Minnesota Statutes 1994, sections 48.1585; 48.512, 
        subdivision 6; 48.97; and 48.991, are repealed. 
           Sec. 26.  [DELAYED REPEALER.] 
           Minnesota Statutes 1994, sections 47.80; 47.81; 47.82; 
        47.83; 47.84; 47.85; 48.95; and 48.98, are repealed. 
           Sec. 27.  [EFFECTIVE DATE.] 
           Sections 1, 5, 20 to 22, and 25 are effective the day 
        following final enactment.  Sections 2 to 4 and 6 to 19 are 
        effective September 29, 1995, except that the portions of 
        section 17 that strike existing clauses (4) and (7) are 
        effective the day following final enactment. 
           Presented to the governor May 22, 1995 
           Signed by the governor May 24, 1995, 10:20 a.m.

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