Full Text of HB1572 98th General Assembly
HB1572eng 98TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Credit Union Act is amended by | 5 | | changing 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 | 8 | | regulated by the
Department. The Secretary in executing the | 9 | | powers and discharging the duties
vested by law in the | 10 | | Department 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 | 13 | | becoming law.
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