History of Department of Financial Institutions

History

The Department of Financial Institutions was created in 1995 Wisconsin Act 27. The formerly independent offices of the commissioners of banking, savings and loan, and securities were reorganized as divisions and transferred to the department. In addition, Act 27 transferred the responsibility for business organization filings and the Uniform Commercial Code lien information fillings to the department from the Office of the Secretary of State. The same act transferred the regulation of mortgage bankers and loan originators and solicitors to the department from the Department of Regulation and Licensing.

Department's Responsibilities

The Department of Financial Institutions regulates state-chartered banks, savings and loans associations, and savings banks, as well as various operations of the securities industry. It examines and files charters and other documents of businesses and organizations and registers and regulates the mortgage banking industry and other financial service providers. It oversees Uniform Commercial Code filings. It also administers the Wisconsin Consumer Act and registers merchants who extend credit that carries a finance charge. The department is self-supporting through program revenue derived from fees and assessments paid by regulated entities and individuals.

Division History and Responsibilities

Division of Administrative Services and Technology

Provides support services to the department through its administration of the agency's budget, personnel, procurement, and information technology services.

Division of Banking

History:

For the first five years of statehood, no regular commercial banks existed in Wisconsin. Prior to amendment in 1902, Article XI of the Wisconsin Constitution required that any banking law must be approved in a statewide referendum. Bank regulation began when the legislature created the Office of Bank Comptroller in Chapter 479, Laws of 1852, and the voters approved the law in 1853. That law allowed any group meeting state requirements to go into the banking business. It was designed primarily to regulate the issuance of bank notes. Bank supervision was transferred to the state treasurer in 1868 and remained with that office until 1903.

The 1902 constitutional amendment gave the legislation the power to enact general banking laws without a referendum. In Chapter 234, Laws of 1903, the legislature created the State Banking Department. The department also supervised savings and loan associations until 1947 and credit unions until 1972. Under the 1967 executive branch reorganization, the department continued as an independent agency and was renamed the Office of the Commissioner of banking. 1995 Wisconsin Act 27 reorganized the agency as the Division of Banking and transferred it to the Department of Financial Institutions.

Responsibilities:

The Division of Banking regulates and supervises state-chartered banks and consumer financial service industries under statutory Chapter 220, 221, 223, and 224. In addition to chartering and regularly examining state banks, the division licenses loan companies, mortgage bankers, mortgage brokers, loan originators, collection agencies, community currency exchanges, sales finance companies, adjustment services companies, sellers of checks, and insurance premium finance companies. It also regulates auto dealers' installment sales contracts. The division investigates applications for expanded banking powers, new financial products, and interstate bank acquisitions and mergers. It may conduct joint examinations with Federal Reserve System examiners and with the Federal Deposit Insurance Corporation. With Banking Review Board approval, the administrator may establish uniform rules for savings programs and fiduciary operation.

The division has assumed the duties of the Division of Savings Institutions and is advised by the Savings and Loan Review Board and the Savings Bank Review Board. It supervises state-chartered savings and loan associations and savings banks and enforces the law governing them under statutory Chapter 214 and 215. It works to resolve consumer complaints and reviews and approves applications for acquisitions, new branches and other offices, and the organization of mutual holding companies. It may rule on interstate mergers or acquisitions. It also conducts joint examinations of associations with the federal Office of Thrift Institutions and may examine savings banks with the Federal Deposit Insurance Corporation.

Division of Corporate and Consumer Services

Responsible for examining and filing business records for corporations and other organizations. It examines charters, documents that effect mergers, consolidations, and dissolutions, and reviews the annual reports of various businesses, including partnerships, corporations, limited liability companies, cooperatives, and foreign corporations. It also examines and files documents under the Uniform Commercial Code, including statements of business indebtedness, consignments, terminations, and financing statements and maintains the statewide Uniform Commercial Code lien system. The division prepares certified copies of the records in its custody and responds to inquiries about corporations and other business entities and organizations for which it has records.

Division of Securities

History:

Laws enacted by states to protect the public against securities fraud are commonly referred to as "blue sky" laws. (The term "blue sky" is believed to have originated when a judge ruled that a particular stock had about the same value as a patch of blue sky.) Wisconsin's first "blue sky" law was Chapter 756, Laws of 1913. This law was revised successively in 1919, 1933, 1941, and 1969. The current Wisconsin Uniform Securities Law was enacted as Chapter 71, Laws of 1969, and it is based upon the model Uniform Securities Act, which has been adopted in most states. From 1913 until 1939, the regulation of securities came under the jurisdiction first of the Railroad Commission (and its successor the Public Service Commission) and later the State Banking Department. The Department of Securities was created by Chapter 68, Laws of 1939, to regulate the sale of stocks, bonds, and other forms of business ownership or debt. It was renamed the Office of the Commissioner of Securities by Chapter 75, Laws of 1967. 1995 Wisconsin Act 27, reorganized the agency as the Division of Securities and transferred it to the Department of Financial Institutions.

Responsibilities:

The Division of Securities regulates the sale of investment securities and franchises under statutory Chapters 551, 552, and 553. It examines and registers the offerings and may bar them from registration in this state. The division licenses and monitors the activities of broker-dealers, securities agents, investment advisors, and investment advisor representatives. It conducts field audits and investigates complaints. When violations are detected, it initiates the appropriate administrative, injunctive, or criminal actions. The division also regulates corporate takeovers.

Office of Financial Literacy

Provides information to the public on matters of personal finance, with an emphasis on the financial and economic literacy of Wisconsin's youth.

Office of Consumer Affairs

Resolves consumer complaints and advises consumers and lenders regarding their rights and responsibilities under consumer law.

Office of Credit Union

History:

Regulation of credit unions began in 1913 (Chapter 733) when the legislature passed a law that required "cooperative credit associations" to obtain their charters from the State Banking Department. That law was repealed by Chapter 334, Laws of 1923, which required the department to charter and regulate "credit unions". The Office of Commissioner of Credit Unions was created in Chapter 193, Laws of 1971, as a separate agency by removing the credit union division and its advisory board from the Office of the Commissioner of Banking and giving it expanded powers. 1995 Wisconsin Act 27 created the Office of Credit Unions and attached it to the Department of Financial Institutions under section 15.03, Wisconsin Statutes.

Responsibilities:

The Office of Credit Unions regulates credit unions chartered to do business in Wisconsin. It charters new credit unions, examines credit union records and assets, consents to consolidation of credit unions within the state and, in cooperation with similar agencies in neighboring states, approves interstate mergers. If a credit union is not in compliance with state law, the office may remove its officers, suspend operations, or take possession of the credit union's business.

The director is appointed by the governor and must have at least 3 years' experience either in the operation of a credit union or in a credit union supervisory agency or a combination of both. All personal and budget requests by the office must be processed and forwarded without change by the department, unless the office requests or concurs in a change.