221.0324 Assets not to be pledged as security.

(1) In general. A bank or bank officer may not give preference to any depositor or creditor by pledging the assets of the bank as collateral security, except to secure deposits where otherwise permitted or required by law for a particular depositor, to secure repurchase agreements entered into by the bank or as otherwise provided under this section.

(2) Government deposits. A bank may deposit with the treasurer of the United States, or in the custody of federal reserve banks or branches of the federal reserve banks designated by a court, so much of its assets, not exceeding its capital and surplus, as may be necessary to do any of the following:

(a) To qualify as a depository for postal savings funds and other government deposits.

(b) To qualify as a depository for bankrupt estates, debtors, corporations and railroads under reorganization under federal bankruptcy laws and receivers, trustees and other officers thereof appointed by any U.S. district court or by any bankruptcy court of the United States. In acting as a depository under this paragraph, a state bank has all the rights and privileges granted to banking institutions under section 61 of the U.S. bankruptcy act, as amended.

(3) Temporary purposes. A bank may borrow money for temporary purposes, and may pledge assets of the bank not exceeding 50 percent in excess of the amount borrowed as collateral security for this borrowing, if the board of directors has adopted a resolution designating the lender from which the money may be borrowed, the maximum amount for which the bank may become indebted at any one time and the names of the officers who may sign the promissory note evidencing the indebtedness.

(4) Bond requirements. A bank that is authorized to exercise trust powers and that complies with s. 223.02 is exempt from furnishing the bond specified in s. 221.0316 and is entitled to the same exemption as to making and filing any oath or giving any bond or security as is conferred on trust company banks by s. 223.03 (6) (a).

(5) Pledges to federal reserve board. A bank may pledge assets in an amount not to exceed 4 times the amount of its capital to the federal reserve bank, as fiscal agent of the United States, of the federal reserve district in which it is located, except that no such pledge shall be made in excess of the amount of its capital without the consent of the division.

(6) Borrowing to reloan. If a bank is borrowing habitually for the purpose of reloaning, the division may require the bank to repay money so borrowed.

(7) Rediscounting and endorsing negotiable notes. This section does not prevent a bank from rediscounting in good faith and endorsing its negotiable notes, if authorized by a recorded resolution of the board of directors.

(8) Certificates of deposit. A bank may not issue its certificate of deposit for the purpose of borrowing money. A bank may not make partial payments upon certificates of deposit.

(9) Pledges to and loans from the federal home loan bank. Notwithstanding sub. (3), a bank that is a member of the federal home loan bank may borrow money from the federal home loan bank and may pledge bank assets as collateral to secure the loan or any other extension of credit from the federal home loan bank.

History: 1995 a. 336; 2001 a. 102; 2019 a. 65.