HB1572 EngrossedLRB098 09750 MGM 39899 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Credit Union Act is amended by
5changing Section 8 as follows:
 
6    (205 ILCS 305/8)  (from Ch. 17, par. 4409)
7    Sec. 8. Secretary's powers and duties. Credit unions are
8regulated by the Department. The Secretary in executing the
9powers and discharging the duties vested by law in the
10Department has the following powers and duties:
11        (1) To exercise the rights, powers and duties set forth
12    in this Act or any related Act. The Director shall oversee
13    the functions of the Division and report to the Secretary,
14    with respect to the Director's exercise of any of the
15    rights, powers, and duties vested by law in the Secretary
16    under this Act. All references in this Act to the Secretary
17    shall be deemed to include the Director, as a person
18    authorized by the Secretary or this Act to assume
19    responsibility for the oversight of the functions of the
20    Department relating to the regulatory supervision of
21    credit unions under this Act.
22        (2) To prescribe rules and regulations for the
23    administration of this Act. The provisions of the Illinois

 

 

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1    Administrative Procedure Act are hereby expressly adopted
2    and incorporated herein as though a part of this Act, and
3    shall apply to all administrative rules and procedures of
4    the Department under this Act.
5        (3) To direct and supervise all the administrative and
6    technical activities of the Department including the
7    employment of a Credit Union Supervisor who shall have
8    knowledge in the theory and practice of, or experience in,
9    the operations or supervision of financial institutions,
10    preferably credit unions, and such other persons as are
11    necessary to carry out his functions. The Secretary shall
12    ensure that all examiners appointed or assigned to examine
13    the affairs of State-chartered credit unions possess the
14    necessary training and continuing education to effectively
15    execute their jobs.
16        (4) To issue cease and desist orders when in the
17    opinion of the Secretary, a credit union is engaged or has
18    engaged, or the Secretary has reasonable cause to believe
19    the credit union is about to engage, in an unsafe or
20    unsound practice, or is violating or has violated or the
21    Secretary has reasonable cause to believe is about to
22    violate a law, rule or regulation or any condition imposed
23    in writing by the Department.
24        (5) To suspend from office and to prohibit from further
25    participation in any manner in the conduct of the affairs
26    of his credit union any director, officer or committee

 

 

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1    member who has committed any violation of a law, rule,
2    regulation or of a cease and desist order or who has
3    engaged or participated in any unsafe or unsound practice
4    in connection with the credit union or who has committed or
5    engaged in any act, omission, or practice which constitutes
6    a breach of his fiduciary duty as such director, officer or
7    committee member, when the Secretary has determined that
8    such action or actions have resulted or will result in
9    substantial financial loss or other damage that seriously
10    prejudices the interests of the members.
11        (6) To assess a civil penalty against a credit union
12    for a violation of this Act, any rule adopted in accordance
13    with this Act, any order of the Secretary issued under his
14    or her authority under this Act, or any other action that
15    in the Secretary's discretion is an unsafe or unsound
16    practice provided that:
17            (A) the Secretary reasonably determines, based on
18        objective facts and an accurate assessment of
19        applicable legal standards, that the credit union has:
20                (i) committed a violation of this Act, any rule
21            adopted in accordance with this Act, or any order
22            of the Secretary issued pursuant to his or her
23            authority under this Act; or
24                (ii) engaged or participated in any unsafe or
25            unsound practice;
26            (B) before a civil penalty is assessed under this

 

 

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1        item (6), the Secretary must make the further
2        reasonable determination, based on objective facts and
3        an accurate assessment of applicable legal standards,
4        that the credit union's action constituting a
5        violation under subparagraph (i) of paragraph (A) of
6        item (6) or an unsafe and unsound practice under
7        subparagraph (ii) of paragraph (A) of item (6):
8                (i) directly resulted in a substantial and
9            material financial loss or created a reasonable
10            probability that a substantial and material
11            financial loss will directly result; or
12                (ii) constituted willful misconduct or a
13            material breach of fiduciary duty of any director,
14            officer, or committee member of the credit union;
15            Material financial loss, as referenced in this
16        paragraph (B), shall be assessed in light of
17        surrounding circumstances and the relative size and
18        nature of the financial loss or probable financial
19        loss. Certain benchmarks shall be used in determining
20        whether financial loss is material, such as a
21        percentage of total assets or total gross income for
22        the immediately preceding 12-month period. Absent
23        compelling and extraordinary circumstances, no civil
24        penalty shall be assessed, unless the financial loss or
25        probable financial loss is equal to or greater than
26        either 1% of the credit union's total assets for the

 

 

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1        immediately preceding 12-month period, or 1% of the
2        credit union's total gross income for the immediately
3        preceding 12-month period, whichever is less;
4            (C) (A) before a civil penalty is assessed under
5        this item (6), the credit union must be expressly
6        advised in writing of the:
7                (i) specific violation that could subject it
8            to a penalty under this item (6); and
9                (ii) the specific remedial action to be taken
10            within a specific and reasonable time frame to
11            avoid imposition of the penalty; .
12            (D) Civil penalties assessed under this item (6)
13        shall be remedial, not punitive, and reasonably
14        tailored to ensure future compliance by the credit
15        union with the provisions of this Act and any rules
16        adopted pursuant to this Act;
17            (E) (B) a credit union's failure to take timely
18        remedial action with respect to the specific violation
19        may result in the issuance of an order assessing a
20        civil penalty up to the following maximum amount, based
21        upon the total assets of the credit union:
22                (i) Credit unions with assets of less than $10
23            million................................................$1,000
24                (ii) Credit unions with assets of at least $10
25            million and less than $50 million......................$2,500
26                (iii) Credit unions with assets of at least $50

 

 

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1            million and less than $100 million.....................$5,000
2                (iv) Credit unions with assets of at least $100
3            million and less than $500 million....................$10,000
4                (v) Credit unions with assets of at least $500
5            million and less than $1 billion......................$25,000
6                (vi) Credit unions with assets of $1 billion
7            and greater......................................$50,000; and
8            (F) (C) an order assessing a civil penalty under
9        this item (6) shall take effect upon service of the
10        order, unless the credit union makes a written request
11        for a hearing under 38 IL. Adm. Code 190.20 of the
12        Department's rules for credit unions within 90 days
13        after issuance of the order; in . In that event, the
14        order shall be stayed until a final administrative
15        order is entered. ; and
16            (D) in the event a credit union commits a
17        subsequent violation that is substantially similar to
18        the initial violation for which a cure period under
19        paragraph (A) of this item (6) was provided the credit
20        union, no additional cure period shall be required
21        before another order is issued assessing a civil
22        penalty for the subsequent violation. Any such order
23        shall take effect upon service of the order, subject to
24        the credit union's right to request a hearing as
25        described in paragraph (C) of this item (6). If a
26        hearing is requested, the order shall be stayed until a

 

 

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1        final administrative order is entered.
2        This item (6) shall not apply to violations separately
3    addressed in rules as authorized under item (7) of this
4    Section.
5        (7) Except for the fees established in this Act, to
6    prescribe, by rule and regulation, fees and penalties for
7    preparing, approving, and filing reports and other
8    documents; furnishing transcripts; holding hearings;
9    investigating applications for permission to organize,
10    merge, or convert; failure to maintain accurate books and
11    records to enable the Department to conduct an examination;
12    and taking supervisory actions.
13        (8) To destroy, in his discretion, any or all books and
14    records of any credit union in his possession or under his
15    control after the expiration of three years from the date
16    of cancellation of the charter of such credit unions.
17        (9) To make investigations and to conduct research and
18    studies and to publish some of the problems of persons in
19    obtaining credit at reasonable rates of interest and of the
20    methods and benefits of cooperative saving and lending for
21    such persons.
22        (10) To authorize, foster or establish experimental,
23    developmental, demonstration or pilot projects by public
24    or private organizations including credit unions which:
25            (a) promote more effective operation of credit
26        unions so as to provide members an opportunity to use

 

 

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1        and control their own money to improve their economic
2        and social conditions; or
3            (b) are in the best interests of credit unions,
4        their members and the people of the State of Illinois.
5        (11) To cooperate in studies, training or other
6    administrative activities with, but not limited to, the
7    NCUA, other state credit union regulatory agencies and
8    industry trade associations in order to promote more
9    effective and efficient supervision of Illinois chartered
10    credit unions.
11(Source: P.A. 97-133, eff. 1-1-12.)
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.