1.1                          A bill for an act
  1.2             relating to financial institutions; regulating fees 
  1.3             and charges imposed on account holders and others; 
  1.4             requiring lifeline checking accounts; amending 
  1.5             Minnesota Statutes 1998, sections 9.031, subdivision 
  1.6             13; 47.61, by adding a subdivision; 47.64, by adding a 
  1.7             subdivision; 47.76; 48.512, subdivision 7; 50.17, 
  1.8             subdivision 11; 51A.21, subdivision 28; 118A.02, 
  1.9             subdivision 1; 427.01; and 427.02; proposing coding 
  1.10            for new law in Minnesota Statutes, chapters 427; and 
  1.11            469. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 1998, section 9.031, 
  1.14  subdivision 13, is amended to read: 
  1.15     Subd. 13.  [REQUIRED COMMUNITY REINVESTMENT RATING AND 
  1.16  AFFORDABLE ACCOUNTS.] Banks and trust companies designated as 
  1.17  depositories must have received ratings of "outstanding" or 
  1.18  "satisfactory" as their most recent rating under United States 
  1.19  Code, title 12, section 2906 and must comply with sections 47.76 
  1.20  and 48.512, subdivision 7.  If a state depository receives a 
  1.21  rating that is below "satisfactory~~,~~" or fails to comply with 
  1.22  sections 47.76 and 48.512, subdivision 7, the executive council 
  1.23  shall revoke its designation as a depository.  The executive 
  1.24  council may delay the effective date of the revocation if 
  1.25  necessary to allow a reasonable period of time to arrange for a 
  1.26  replacement depository.  
  1.27     Sec. 2.  Minnesota Statutes 1998, section 47.61, is amended 
  1.28  by adding a subdivision to read: 
  2.1      Subd. 3a.  "Electronic financial terminal surcharge" means 
  2.2   a transaction fee assessed by the owner or operator of the 
  2.3   electronic financial terminal. 
  2.4      Sec. 3.  Minnesota Statutes 1998, section 47.64, is amended 
  2.5   by adding a subdivision to read: 
  2.6      Subd. 8.  [LIMITATION ON FEES.] An electronic financial 
  2.7   terminal surcharge may not be assessed against a consumer if the 
  2.8   transaction does not relate to or affect an account held by the 
  2.9   consumer with the financial institution that is the owner or 
  2.10  operator of the electronic financial terminal. 
  2.11     Sec. 4.  Minnesota Statutes 1998, section 47.76, is amended 
  2.12  to read: 
  2.13     47.76 [REQUIRED ~~SAVINGS ACCOUNT~~ LIFELINE ACCOUNTS.] 
  2.14     (a) A federal or state chartered financial institution, 
  2.15  including, but not limited to, a bank, savings association, 
  2.16  savings bank, or credit union, shall offer to a Minnesota 
  2.17  resident: 
  2.18     (1) a savings account to promote thrift that has no service 
  2.19  charge or fee, if such an account has an average monthly balance 
  2.20  of more than $50~~.~~, and from which money orders may be purchased 
  2.21  for a charge of 50 cents or less; and 
  2.22     (2) a checking account that: 
  2.23     (i) has a charge of not more than $10 per dishonored 
  2.24  overdraft and not more than $15 per honored overdraft; 
  2.25     (ii) has a monthly maintenance fee of not more than $3 if 
  2.26  no minimum balance is maintained; and 
  2.27     (iii) provides optional overdraft protection with a limit 
  2.28  as low as $200 to qualified applicants. 
  2.29     (b) Financial institutions shall actively promote the 
  2.30  accounts required under this section in their service areas 
  2.31  determined for purposes of the federal Community Reinvestment 
  2.32  Act. 
  2.33     (c) The accounts required under this section must be 
  2.34  designated by financial institutions as the lifeline savings 
  2.35  account and the lifeline checking account. 
  2.36     Sec. 5.  Minnesota Statutes 1998, section 48.512, 
  3.1   subdivision 7, is amended to read: 
  3.2      Subd. 7.  [TRANSACTION ACCOUNT SERVICE CHARGES AND CHARGES 
  3.3   RELATING TO DISHONORED CHECKS.] (a) The establishment of 
  3.4   transaction account service charges and the amounts of the 
  3.5   charges not otherwise limited or prescribed by law or rule is a 
  3.6   business decision to be made by each financial intermediary 
  3.7   according to sound business judgment and safe, sound financial 
  3.8   institution operational standards.  In establishing transaction 
  3.9   account service charges, the financial intermediary may 
  3.10  consider~~, but is not limited to considering~~: 
  3.11     (1) costs incurred by the institution, plus a reasonable 
  3.12  profit margin, in providing the service; 
  3.13     (2) the deterrence of misuse by customers of financial 
  3.14  institution services; 
  3.15     (3) the establishment of the competitive position of the 
  3.16  financial institution in accordance with the institution's 
  3.17  marketing strategy; and 
  3.18     (4) maintenance of the safety and soundness of the 
  3.19  institution. 
  3.20     (b) Transaction account service charges must be reasonable 
  3.21  in relation to these considerations and should be arrived at by 
  3.22  each financial intermediary on a competitive basis and not on 
  3.23  the basis of any agreement, arrangement, undertaking, or 
  3.24  discussion with other financial intermediaries or their officers.
  3.25     (c) A financial intermediary may not impose a service 
  3.26  charge ~~in excess of $4~~ for a dishonored check on any person 
  3.27  other than the issuer of the check. 
  3.28     (d) A financial intermediary may not impose a charge for 
  3.29  the voluntary closing of a transaction account. 
  3.30     (e) A financial intermediary may not implement or maintain 
  3.31  a policy of processing checks drawn against a transaction 
  3.32  account based on debiting the largest checks first. 
  3.33     (f) A financial intermediary must, at the time an account 
  3.34  is opened or a service is delivered, whichever is earlier, or 
  3.35  upon a customer's request, disclose to the customer on a 
  3.36  standardized disclosure form all service charges that it may 
  4.1   impose, pursuant to the federal Truth in Savings Act, United 
  4.2   States Code, title 12, sections 4301 to 4313, and relevant 
  4.3   federal regulations at Code of Federal Regulations, title 12, 
  4.4   parts 230 and 707.  The standardized form must not exceed one 
  4.5   8-1/2 by 11 inch page and the typeface must exceed ten points.  
  4.6   The format of the standardized service charge disclosure form 
  4.7   shall be prescribed by the commissioner of commerce. 
  4.8      Sec. 6.  Minnesota Statutes 1998, section 50.17, 
  4.9   subdivision 11, is amended to read: 
  4.10     Subd. 11.  [SERVICE CHARGES.] A savings bank may contract 
  4.11  with depositors for service charges in connection with the 
  4.12  opening and maintaining of deposit accounts and for providing 
  4.13  services ancillary to the opening and maintaining of deposit 
  4.14  accounts.  The service charges are ~~a matter of contract between~~ 
  4.15  ~~the savings bank and the depositor, and the contract will be~~ 
  4.16  ~~fully enforceable in accordance with its stated terms~~ subject to 
  4.17  section 48.512, subdivision 7. 
  4.18     Sec. 7.  Minnesota Statutes 1998, section 51A.21, 
  4.19  subdivision 28, is amended to read: 
  4.20     Subd. 28.  [SERVICE CHARGES.] To contract with depositors 
  4.21  for service charges in connection with the opening and 
  4.22  maintaining of deposit accounts and for providing services 
  4.23  ancillary to the opening and maintaining of deposit accounts.  
  4.24  Service charges are ~~a matter of contract between the association~~ 
  4.25  ~~and the depositor, and any such contract is fully enforceable~~ 
  4.26  ~~according to its stated terms~~ subject to section 48.512, 
  4.27  subdivision 7. 
  4.28     Sec. 8.  Minnesota Statutes 1998, section 118A.02, 
  4.29  subdivision 1, is amended to read: 
  4.30     Subdivision 1.  [DESIGNATION; DELEGATION.] (a) The 
  4.31  governing body of each government entity shall designate, as a 
  4.32  depository of its funds, one or more financial institutions.  
  4.33  The governing body may authorize the treasurer or chief 
  4.34  financial officer to: 
  4.35     (1) designate depositories of the funds; 
  4.36     (2) make investments of funds under sections 118A.01 to 
  5.1   118A.06 or other applicable law; or 
  5.2      (3) both designate depositories and make investments as 
  5.3   provided in this subdivision. 
  5.4      (b) A depository designated under paragraph (a) must comply 
  5.5   with sections 47.76 and 48.512, subdivision 7. 
  5.6      Sec. 9.  Minnesota Statutes 1998, section 427.01, is 
  5.7   amended to read: 
  5.8      427.01 [DEPOSIT OF PUBLIC FUNDS.] 
  5.9      The council of any statutory city or of any city of the 
  5.10  fourth class shall designate as a depository of city funds such 
  5.11  national, state, or private banks as it may deem proper.  A 
  5.12  depository must comply with sections 47.76 and 48.512, 
  5.13  subdivision 7.  Except as to deposits insured by the federal 
  5.14  deposit insurance corporation or protected by collateral or a 
  5.15  corporate surety bond furnished under section 118A.03, each 
  5.16  shall give bond to the municipality in at least double the 
  5.17  amount authorized to be deposited therein, to be approved by the 
  5.18  council, conditioned to repay all sums deposited therein upon 
  5.19  proper demand therefor or at such time, not exceeding one year, 
  5.20  as fixed by the terms of the deposit, and for the performance of 
  5.21  such other duties as the council may require.  The council shall 
  5.22  require the city treasurer to deposit all or any part of the 
  5.23  public funds in hand in such banks and to withdraw the same when 
  5.24  so directed.  All the terms and conditions of deposit shall be 
  5.25  set forth in the resolution designating the several 
  5.26  depositories, which resolution shall be filed with the clerk or 
  5.27  recorder.  The treasurer shall not be liable on the treasurer's 
  5.28  bond for any money so deposited by direction of the council and 
  5.29  lost through the failure, bankruptcy, or other default of the 
  5.30  bank.  All interest accruing upon these deposits shall belong to 
  5.31  the city.  
  5.32     Sec. 10.  Minnesota Statutes 1998, section 427.02, is 
  5.33  amended to read: 
  5.34     427.02 [DEPOSITORIES.] 
  5.35     The council of any city in this state, but not including 
  5.36  cities when governed under a charter adopted under and pursuant 
  6.1   to the Constitution of the state of Minnesota, article IV, 
  6.2   section 36, article XI, section 4, or article XII, section 5, 
  6.3   and sections 410.03 to 410.24, and all acts supplemental 
  6.4   thereto, in which charter the matter of designating depositories 
  6.5   for city funds and the protection thereof is provided for, or in 
  6.6   which charter it shall hereafter be provided for, shall have the 
  6.7   power and authority to designate or redesignate at the beginning 
  6.8   of each calendar year, or from time to time, the banks or other 
  6.9   legal depositories of any city in which the treasurer of the 
  6.10  city shall deposit and keep the moneys of the city, designating 
  6.11  in each instance the maximum amount which may at any time be 
  6.12  kept in any one of these depositories, which maximum amount 
  6.13  shall in no case exceed 25 percent of the paid-up capital and 
  6.14  surplus of the depository, unless the depository shall deposit 
  6.15  with the treasurer of the city United States government bonds to 
  6.16  secure the deposit of the funds of the city; and, in that event, 
  6.17  the amount so deposited shall not exceed the amount of the 
  6.18  United States government bonds so deposited.  No depository 
  6.19  shall deposit United States government bonds which mature within 
  6.20  one year from the date such bonds were first considered as a 
  6.21  part of the bank's reserve and which reserves are required by 
  6.22  section 48.221.  The council of each city shall, at all times, 
  6.23  designate depositories in the city, or elsewhere in the United 
  6.24  States, sufficient for the depository of all funds which are 
  6.25  likely to be in the hands of the treasurer of the city at any 
  6.26  one time and shall, so far as consistent with the best interest 
  6.27  of the city, designate these depositories in the city and 
  6.28  require from these depositories good and sufficient bonds 
  6.29  payable to the city in a penal sum not to exceed the amount 
  6.30  designated as the limit of deposit therein, and conditioned for 
  6.31  the safekeeping and payment of funds so deposited, or, in lieu 
  6.32  thereof, good and sufficient collateral as provided for by 
  6.33  section 118A.03.  A depository must comply with sections 47.76 
  6.34  and 48.512, subdivision 7. 
  6.35     Sec. 11.  [427.025] [DEPOSITORIES; HOME RULE CHARTER 
  6.36  CITIES.] 
  7.1      Home rule charter cities may designate as depositories only 
  7.2   financial institutions that comply with sections 47.76 and 
  7.3   48.512, subdivision 7.  This section applies regardless of any 
  7.4   provision of a home rule charter to the contrary. 
  7.5      Sec. 12.  [469.32] [LOAN PROGRAMS; FINANCIAL INSTITUTIONS.] 
  7.6      No financial institution is eligible to participate in a 
  7.7   loan program sponsored or funded by the state or by any of its 
  7.8   political subdivisions unless the financial institution complies 
  7.9   with sections 47.76 and 48.512, subdivision 7. 
  7.10     Sec. 13.  [EFFECTIVE DATE.] 
  7.11     Sections 1 to 12 are effective January 1, 2000.