State of Illinois
90th General Assembly
Legislation

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[ Introduced ][ Engrossed ][ Senate Amendment 001 ]

90_HB0586enr

      205 ILCS 5/3              from Ch. 17, par. 309
          Amends the  Illinois  Banking  Act.   Makes  a  technical
      change in a Section relating to formation and powers.
                                                     LRB9002584JSfg
HB0586 Enrolled                                LRB9002584JSfg
 1        AN  ACT  authorizing and regulating the sale of insurance
 2    by financial institutions.
 3        Be it enacted by the People of  the  State  of  Illinois,
 4    represented in the General Assembly:
 5        Section  5.   The  Illinois  Banking  Act  is  amended by
 6    changing Sections 5 and 48.2 as follows:
 7        (205 ILCS 5/5) (from Ch. 17, par. 311)
 8        Sec. 5.  General  corporate  powers.   A  bank  organized
 9    under  this  Act  or subject hereto shall be a body corporate
10    and politic and shall, without specific  mention  thereof  in
11    the  charter,  have  all the powers conferred by this Act and
12    the following additional general corporate powers:
13        (1)  To sue and be sued,  complain,  and  defend  in  its
14    corporate name.
15        (2)  To  have  a  corporate seal, which may be altered at
16    pleasure, and to use the same by causing it  or  a  facsimile
17    thereof   to  be  impressed  or  affixed  or  in  any  manner
18    reproduced, provided that the affixing of a corporate seal to
19    an instrument shall not give the instrument additional  force
20    or effect, or change the construction thereof, and the use of
21    a corporate seal is not mandatory.
22        (3)  To  make,  alter,  amend,  and  repeal  bylaws,  not
23    inconsistent   with   its   charter  or  with  law,  for  the
24    administration of the affairs of the bank.
25        (4)  To elect or appoint and remove officers  and  agents
26    of   the   bank   and  define  their  duties  and  fix  their
27    compensation.
28        (5)  To  adopt  and  operate  reasonable   bonus   plans,
29    profit-sharing  plans, stock-bonus plans, stock-option plans,
30    pension plans and similar incentive plans for its  directors,
31    officers and employees.
HB0586 Enrolled            -2-                 LRB9002584JSfg
 1        (5.1)  To  manage,  operate and administer a fund for the
 2    investment of funds by a public agency or agencies, including
 3    any unit of local  government  or  school  district,  or  any
 4    person.   The  fund  for  a public agency shall invest in the
 5    same  type  of  investments  and  be  subject  to  the   same
 6    limitations provided for the investment of public funds.  The
 7    fund  for  public  agencies  shall maintain a separate ledger
 8    showing the amount of investment for each  public  agency  in
 9    the  fund. "Public funds" and "public agency" as used in this
10    Section shall have the meanings ascribed to them in Section 1
11    of the Public Funds Investment Act.
12        (6)  To make reasonable donations for the public  welfare
13    or  for  charitable,  scientific,  religious  or  educational
14    purposes.
15        (7)  To  borrow or incur an obligation; and to pledge its
16    assets:
17             (a)  to secure its borrowings, its lease of personal
18        or real property or its other nondeposit obligations;
19             (b)  to enable it to act as agent for  the  sale  of
20        obligations of the United States;
21             (c)  to  secure  deposits  of  public  money  of the
22        United States, whenever  required  by  the  laws  of  the
23        United   States,  including  without  being  limited  to,
24        revenues and funds the deposit of which is subject to the
25        control or regulation of the United States or any of  its
26        officers, agents, or employees and Postal Savings funds;
27             (d)  to secure deposits of public money of any state
28        or  of  any  political corporation or subdivision thereof
29        including, without being limited to, revenues  and  funds
30        the  deposit  of  which  is  subject  to  the  control or
31        regulation of any state or of any  political  corporation
32        or  subdivisions  thereof  or  of  any of their officers,
33        agents, or employees;
34             (e)  to secure deposits of money  whenever  required
HB0586 Enrolled            -3-                 LRB9002584JSfg
 1        by the National Bankruptcy Act;
 2             (f)  to  qualify  under Section 2-9 of the Corporate
 3        Fiduciary Act; and
 4             (g)  to  secure  trust  funds  commingled  with  the
 5        bank's  funds,  whether  deposited  by  the  bank  or  an
 6        affiliate of the bank, pursuant to  Section  2-8  of  the
 7        Corporate Fiduciary Act.
 8        (8)  To  own, possess, and carry as assets all or part of
 9    the real estate necessary in or with which to do its  banking
10    business, either directly or indirectly through the ownership
11    of  all  or part of the capital stock, shares or interests in
12    any corporation, association, trust engaged  in  holding  any
13    part  or  parts  or all of the bank premises, engaged in such
14    business and in conducting a safe  deposit  business  in  the
15    premises or part of them, or engaged in any activity that the
16    bank  is  permitted  to  conduct  in a subsidiary pursuant to
17    paragraph (12) of this Section 5.
18        (9)  To own, possess, and  carry  as  assets  other  real
19    estate  to which it may obtain title in the collection of its
20    debts or that was  formerly  used  as  a  part  of  the  bank
21    premises,  but  title  to  any  real  estate except as herein
22    permitted shall not be retained by the bank, either  directly
23    or  by  or  through  a subsidiary, as permitted by subsection
24    (12) of this Section for a total period of more than 5  years
25    after  acquiring title, either directly or indirectly, unless
26    a request for extension of time shall have been submitted  in
27    writing to and approved by the Commissioner.
28        (10)  To  do any act, including the acquisition of stock,
29    necessary to  obtain  insurance  of  its  deposits,  or  part
30    thereof, and any act necessary to obtain a guaranty, in whole
31    or  in part, of any of its loans or investments by the United
32    States or any agency thereof, and any act necessary  to  sell
33    or  otherwise  dispose  of any of its loans or investments to
34    the United States or any agency thereof, and to  acquire  and
HB0586 Enrolled            -4-                 LRB9002584JSfg
 1    hold membership in the Federal Reserve System.
 2        (11)  Notwithstanding  any  other provisions of this Act,
 3    to do any act and  to  own,  possess,  and  carry  as  assets
 4    property  of  the  character, including stock, that is at the
 5    time authorized or permitted to national banks by an  Act  of
 6    Congress,  but  subject  always  to  the same limitations and
 7    restrictions as are  applicable  to  national  banks  by  the
 8    pertinent federal law.
 9        (12)  To  own,  possess, and carry as assets stock of one
10    or more corporations that is, or are, engaged in one or  more
11    of the following businesses:
12             (a)  holding   title  to  and  administering  assets
13        acquired as a result of the collection or liquidating  of
14        loans, investments, or discounts; or
15             (b)  holding  title  to  and  administering personal
16        property acquired by the  bank,  directly  or  indirectly
17        through  a  subsidiary,  for  the  purpose  of leasing to
18        others, provided the lease or leases and  the  investment
19        of  the  bank,  directly or through a subsidiary, in that
20        personal property otherwise comply with Section  35.1  of
21        this Act; or
22             (c)  carrying   on   or  administering  any  of  the
23        activities excepting  the  receipt  of  deposits  or  the
24        payment  of  checks  or  other  orders for the payment of
25        money in which a bank  may  engage  in  carrying  on  its
26        general banking business; provided, however, that nothing
27        contained in this paragraph (c) shall be deemed to permit
28        a  bank organized under this Act or subject hereto to do,
29        either directly or indirectly through any subsidiary, any
30        act, including the making of any loan or  investment,  or
31        to  own, possess, or carry as assets any property that if
32        done by or owned, possessed, or carried by the State bank
33        would be in violation of or prohibited by  any  provision
34        of this Act.
HB0586 Enrolled            -5-                 LRB9002584JSfg
 1        The provisions of this subsection (12) shall not apply to
 2    and  shall  not be deemed to limit the powers of a State bank
 3    with respect to the ownership, possession,  and  carrying  of
 4    stock  that  a  State  bank  is permitted to own, possess, or
 5    carry under this Act.
 6        Any bank intending to establish a subsidiary  under  this
 7    subsection (12) shall give written notice to the Commissioner
 8    60  days prior to the subsidiary's commencing of business or,
 9    as the case may be, prior to acquiring stock in a corporation
10    that has already commenced business.   The  Commissioner  may
11    specify  the  form of the notice and may promulgate rules and
12    regulations to administer this subsection (12).
13        (13)  To  accept  for  payment  at  a  future  date   not
14    exceeding  one year from the date of acceptance, drafts drawn
15    upon it by its customers; and to issue,  advise,  or  confirm
16    letters  of  credit  authorizing  the holders thereof to draw
17    drafts upon it or its correspondents.
18        (14)  To own and lease personal property acquired by  the
19    bank  at  the  request  of  a prospective lessee and upon the
20    agreement of that  person  to  lease  the  personal  property
21    provided  that the lease, the agreement with respect thereto,
22    and the amount of the investment of the bank in the  property
23    comply with Section 35.1 of this Act.
24        (15) (a)  To  establish  and maintain, in addition to the
25    main banking premises, branches offering any banking services
26    permitted at the main banking premises of a State bank.
27        (b)  To establish  and  maintain,  after  May  31,  1997,
28    branches  in  another  state that may conduct any activity in
29    that state that is authorized or permitted for any bank  that
30    has  a  banking  charter issued by that state, subject to the
31    same limitations and  restrictions  that  are  applicable  to
32    banks chartered by that state.
33        (16)  (Blank).
34        (17)  To  establish and maintain terminals, as authorized
HB0586 Enrolled            -6-                 LRB9002584JSfg
 1    by the Electronic Fund Transfer Act.
 2        (18)  To establish and maintain temporary service  booths
 3    at  any  International  Fair  held  in  this  State  which is
 4    approved by the United States Department of Commerce, for the
 5    duration of the international fair for the  sole  purpose  of
 6    providing  a  convenient place for foreign trade customers at
 7    the fair to exchange  their  home  countries'  currency  into
 8    United  States currency or the converse. This power shall not
 9    be construed  as  establishing  a  new  place  or  change  of
10    location for the bank providing the service booth.
11        (19)  To  indemnify  its  officers, directors, employees,
12    and agents, as authorized for corporations under Section 8.75
13    of the Business Corporation Act of 1983.
14        (20)  To own, possess, and carry as assets stock  of,  or
15    be  or  become  a member of, any corporation, mutual company,
16    association, trust, or other entity  formed  exclusively  for
17    the  purpose  of providing directors' and officers' liability
18    and bankers' blanket bond insurance or reinsurance to and for
19    the benefit of the stockholders, members,  or  beneficiaries,
20    or  their assets or businesses, or their officers, directors,
21    employees, or agents, and not to or for the  benefit  of  any
22    other person or entity or the public generally.
23        (21)  To  make debt or equity investments in corporations
24    or projects, whether for profit or not for  profit,  designed
25    to  promote the development of the community and its welfare,
26    provided that  the  aggregate  investment  in  all  of  these
27    corporations  and in all of these projects does not exceed 5%
28    of the unimpaired capital and unimpaired surplus of the  bank
29    and   provided  that  this  limitation  shall  not  apply  to
30    creditworthy loans by  the  bank  to  those  corporations  or
31    projects.   Upon  written  application to the Commissioner, a
32    bank may make an investment that would, when aggregated  with
33    all  other  such  investments,  exceed  5%  of the unimpaired
34    capital and unimpaired surplus of the bank. The  Commissioner
HB0586 Enrolled            -7-                 LRB9002584JSfg
 1    may  approve the investment if he is of the opinion and finds
 2    that the proposed investment will not have a material adverse
 3    effect on the safety and soundness of the bank.
 4        (22)  To own, possess, and carry as assets the stock of a
 5    corporation engaged in the ownership or operation of a travel
 6    agency or to operate  a  travel  agency  as  a  part  of  its
 7    business, provided that the bank either owned, possessed, and
 8    carried as assets the stock of such a corporation or operated
 9    a travel agency as part of its business before July 1, 1991.
10        (23)  With respect to affiliate facilities:
11             (a)  to  conduct  at affiliate facilities any of the
12        following transactions  for  and  on  behalf  of  another
13        commonly  owned bank, if so authorized by the other bank:
14        receiving deposits; cashing and issuing  checks,  drafts,
15        and  money orders; changing money; and receiving payments
16        on existing indebtedness; and
17             (b)  to authorize a commonly owned bank  to  conduct
18        for and on behalf of it any of the transactions listed in
19        this paragraph (23) at one or more affiliate facilities.
20        Any  bank intending to conduct or to authorize a commonly
21    owned bank to conduct at an affiliate  facility  any  of  the
22    transactions  specified  in  this  paragraph  (23) shall give
23    written notice to the Commissioner at least  30  days  before
24    any such transaction is conducted at the affiliate facility.
25        (24)  To  act  as  the agent for any fire, life, or other
26    insurance company authorized by the  State  of  Illinois,  by
27    soliciting  and  selling insurance and collecting premiums on
28    policies issued by such company; and may receive for services
29    so rendered such fees or commissions as may  be  agreed  upon
30    between  the said bank and the insurance company for which it
31    may act as agent; provided, however, that no such bank  shall
32    in any case assume or guarantee the payment of any premium on
33    insurance   policies   issued   through  its  agency  by  its
34    principal; and provided further,  that  the  bank  shall  not
HB0586 Enrolled            -8-                 LRB9002584JSfg
 1    guarantee  the  truth  of any statement made by an assured in
 2    filing his application for insurance.
 3    (Source: P.A.  88-4;  89-208,  eff.  9-29-95;  89-310,   eff.
 4    1-1-96; 89-364, eff. 8-18-95; 89-626, eff. 8-9-96.)
 5        (205 ILCS 5/48.2) (from Ch. 17, par. 360.1)
 6        Sec.  48.2.   Prohibition against certain activities. (a)
 7    Any bank, subsidiary, affiliate, officer or employee of  such
 8    bank subject to this Act shall not:
 9        (1)  grant  any loan on the prior condition, agreement or
10    understanding that the borrower contract  with  any  specific
11    person or organization for the following:
12        (A)  insurance services of an agent or broker;
13        (B)  legal services rendered to the borrower;
14        (C)  services of a real estate agent or broker; or
15        (D)  real estate or property management services;
16        (2)  require  that  insurance  services,  legal services,
17    real estate  services  or  property  management  services  be
18    placed with any subsidiary, affiliate, officer or employee of
19    any bank.
20        (b)  Any   bank   or   subsidiary,  affiliate,  employee,
21    officer,  banking  house,   branch   bank,   branch   office,
22    additional  office or agency of such bank that is transacting
23    an insurance business in this State shall comply with Article
24    XLIV Section 499.1 of the "Illinois Insurance Code".
25        (c)  Any officer or employee of a bank or its  affiliates
26    or  subsidiaries  who  violates  this  Section is guilty of a
27    business offense, and upon conviction shall be fined not more
28    than $1,000.  This Section does not create a private cause of
29    action for civil damages.
30        (d)  In any contract  or  loan  which  is  secured  by  a
31    mortgage,  deed  of  trust,  or conveyance in the nature of a
32    mortgage, on residential real estate, the interest  which  is
33    computed,  calculated, charged, or collected pursuant to such
HB0586 Enrolled            -9-                 LRB9002584JSfg
 1    contract or loan, or  pursuant  to  any  regulation  or  rule
 2    promulgated  pursuant  to  this  Act,  may  not  be computed,
 3    calculated, charged or  collected  for  any  period  of  time
 4    occurring  after  the  date  on which the total indebtedness,
 5    with the exception of late  payment  penalties,  is  paid  in
 6    full.   For  purposes  of this subsection (d) of this Section
 7    48.2, a prepayment  shall  mean  the  payment  of  the  total
 8    indebtedness, with the exception of late payment penalties if
 9    incurred or charged, on any date before the date specified in
10    the   contract   or   loan   agreement  on  which  the  total
11    indebtedness shall be paid in full, or  before  the  date  on
12    which all payments, if timely made, shall have been made.  In
13    the  event  of a prepayment of the indebtedness which is made
14    on  a  date  after  the  date  on  which  interest   on   the
15    indebtedness  was  last  computed,  calculated,  charged,  or
16    collected  but  before the next date on which interest on the
17    indebtedness was to  be  calculated,  computed,  charged,  or
18    collected,  the  lender  may  calculate,  charge  and collect
19    interest on the indebtedness for  the  period  which  elapsed
20    between the date on which the prepayment is made and the date
21    on  which  interest  on  the  indebtedness was last computed,
22    calculated, charged or collected at a rate equal to 1/360  of
23    the  annual  rate  for  each day which so elapsed, which rate
24    shall be applied to the indebtedness outstanding  as  of  the
25    date  of prepayment.  The lender shall refund to the borrower
26    any interest charged or collected which  exceeds  that  which
27    the  lender  may  charge or collect pursuant to the preceding
28    sentence.  The provisions of  this  amendatory  Act  of  1985
29    shall  apply  only  to  contracts or loans entered into on or
30    after January 1, 1986.
31        (e)  Any bank, affiliate or subsidiary of such bank which
32    shall  engage  in  making  residential   mortgage   financing
33    transactions,  shall  with  respect to each such transaction,
34    provide the following:
HB0586 Enrolled            -10-                LRB9002584JSfg
 1        (1)  if  a  contractual  obligation  is  intended  to   a
 2    borrower,  a  mortgage  commitment  which shall set forth the
 3    material  terms,  conditions  and   contingencies   of   such
 4    commitment;
 5        (2)  if  the servicing of a residential mortgage shall be
 6    transferred from the original mortgagee, within  45  days  of
 7    such  transfer, written notice sent by certified mail, return
 8    receipt requested, to the mortgagor at  the  address  of  the
 9    property,   unless   the   mortgagor   shall   have  directed
10    correspondence from the mortgagee shall be  sent  to  another
11    address,  which notice shall set forth:  the name and address
12    of the transferee; the name, address and telephone number  to
13    which  inquiries  by  the  residential  mortgagor  should  be
14    addressed;  and  the  name  and  address  to which the next 3
15    monthly installments are to be submitted  to  the  transferee
16    and the amount of each of such monthly installment; and
17        (3)  if  the servicing of a residential mortgage shall be
18    transferred again or if  the  information  in  paragraph  (2)
19    above shall change, the notice with the corrected information
20    shall  be provided within 45 days of such subsequent transfer
21    or change in information by the transferee of  the  servicing
22    of the mortgage at that time.
23    (Source: P.A. 85-1209; 85-1379.)
24        Section 10.  The Illinois Savings and Loan Act of 1985 is
25    amended by changing Section 1-6 as follows:
26        (205 ILCS 105/1-6) (from Ch. 17, par. 3301-6)
27        Sec.  1-6.   General  corporate  powers.   An association
28    operating under this  Act  shall  be  a  body  corporate  and
29    politic  and  shall have all of the specific powers conferred
30    by this Act and, in addition thereto, the  following  general
31    powers:
32        (a)  To  sue  and  be  sued,  complain  and defend in its
HB0586 Enrolled            -11-                LRB9002584JSfg
 1    corporate name, and to have a common seal, which it may alter
 2    or renew at pleasure;
 3        (b)  To   obtain   and   maintain   insurance   of    the
 4    association's    withdrawable   capital   by   an   insurance
 5    corporation as defined in this Act;
 6        (c)  Notwithstanding anything to the  contrary  contained
 7    in  this  Act,  to  become  a member of the Federal Home Loan
 8    Bank, and to have all of the powers granted to a  savings  or
 9    thrift  institution  organized  under  the laws of the United
10    States and which is located and doing business in  the  State
11    of Illinois, subject to regulations of the Commissioner;
12        (d)  To  act as a fiscal agent for the United States, the
13    State of Illinois or any department, branch, arm or agency of
14    the State or any unit of local government or school  district
15    in  the  State  when duly designated for that purpose, and as
16    agent to perform the reasonable functions as may be  required
17    of it;
18        (e)  To  become  a member of or deal with any corporation
19    or agency of the United States or the State of  Illinois,  to
20    the   extent   that  the  agency  assists  in  furthering  or
21    facilitating the association's purposes or powers and to that
22    end to purchase stock or securities thereof or deposit  money
23    therewith,  and  to  comply  with  any  other  conditions  of
24    membership or credit;
25        (f)  To  make  donations  in  reasonable  amounts for the
26    public welfare or for charitable,  scientific,  religious  or
27    educational purposes;
28        (g)  To  adopt  and  operate reasonable insurance, bonus,
29    profit  sharing,  and  retirement  plans  for  officers   and
30    employees;   likewise,   directors   who  are  not  officers,
31    including,  but  not  limited  to,  advisory,  honorary,  and
32    emeritus directors, may participate in those plans;
33        (h)  To reject any application for membership, to  retire
34    withdrawable  capital  by  enforced retirement as provided in
HB0586 Enrolled            -12-                LRB9002584JSfg
 1    this Act and the by-laws, and to limit  the  issuance  of  or
 2    payments   on  withdrawable  capital,  subject,  however,  to
 3    contractual obligations;
 4        (i)  To purchase stock in  service  corporations  and  to
 5    invest in any form of indebtedness of any service corporation
 6    as  defined  in  this  Act,  subject  to  regulations  of the
 7    Commissioner;
 8        (j)  To purchase stock of a corporation  whose  principal
 9    purpose  is  to  operate  a  safe  deposit  company or escrow
10    service company;
11        (k)  To act as Trustee or  Custodian  under  the  Federal
12    Self-Employed  Individuals' Tax Retirement Act of 1962 or any
13    amendments thereto or any other retirement account and invest
14    any funds held in such capacity in a savings account  of  the
15    institution;
16        (l)  (Blank);
17        (m)  To  establish,  maintain  and  operate  terminals as
18    authorized by the Electronic Fund Transfer Act and by Section
19    5  of  the  Illinois   Banking   Act.    The   establishment,
20    maintenance,  operation  and location of such terminals shall
21    be subject to the approval of the Commissioner;
22        (n)  Subject to  the  approval  and  regulations  of  the
23    Commissioner,  an  association  may purchase or assume all or
24    any part of the assets or liabilities of an eligible  insured
25    bank;
26        (o)  To  purchase from a bank, as defined in Section 2 of
27    the Illinois Banking Act, an  insubstantial  portion  of  the
28    total  deposits  of an insured bank.  For the purpose of this
29    subparagraph, "insubstantial portion of the  total  deposits"
30    shall have the same meaning as provided in Section 5(d)(2)(D)
31    of the Federal Deposit Insurance Act;
32        (p)  To effect an acquisition of or conversion to another
33    financial   institution   pursuant  to  Section  205  of  the
34    Financial Institutions Reform, Recovery and  Enforcement  Act
HB0586 Enrolled            -13-                LRB9002584JSfg
 1    of 1989;
 2        (q)  To pledge its assets:
 3             (1)  to enable it to act as an agent for the sale of
 4        obligations of the United States;
 5             (2)  to secure deposits;
 6             (3)  to  secure  deposits of money whenever required
 7        by the National Bankruptcy Act;
 8             (4)  to qualify under Section 2-9 of  the  Corporate
 9        Fiduciary Act; and
10             (5)  to  secure  trust  funds  commingled  with  the
11        institution's funds, whether deposited by the institution
12        or  an  affiliate  of  the institution, as required under
13        Section 2-8 of the Corporate Fiduciary Act; and
14        (r)  To provide temporary  periodic  service  to  persons
15    residing  in  a  bona  fide  nursing  home,  senior citizens'
16    retirement home, or long-term care facility; and
17        (s)  To purchase for its own account shares of stock of a
18    bankers' bank, described in Section 13(b)(1) of the  Illinois
19    Banking  Act,  on the same terms and conditions as a bank may
20    purchase such shares.  In no event shall the total amount  of
21    such  stock  held  by  an  association  in such bankers' bank
22    exceed 10% of its capital and  surplus  (including  undivided
23    profits)  and  in  no event shall an association acquire more
24    than 5% of any class of voting securities  of  such  bankers'
25    bank;.
26        (t)  (s)  To effect a conversion to a State bank pursuant
27    to the provisions of the Illinois Banking Act; and.
28        (u)  Subject to Article XLIV of  the  Illinois  Insurance
29    Code,  to  act  as  the  agent  for  any fire, life, or other
30    insurance company authorized by the  State  of  Illinois,  by
31    soliciting  and  selling insurance and collecting premiums on
32    policies issued by such company; and may receive for services
33    so rendered such fees or commissions as may  be  agreed  upon
34    between  the  said  association and the insurance company for
HB0586 Enrolled            -14-                LRB9002584JSfg
 1    which it may act as agent; provided, however,  that  no  such
 2    association shall in any case assume or guarantee the payment
 3    of  any  premium  on  insurance  policies  issued through its
 4    agency by its  principal;  and  provided  further,  that  the
 5    association  shall  not  guarantee the truth of any statement
 6    made by an assured in filing his application for insurance.
 7    (Source: P.A.  88-481;  89-74,  eff.  6-30-95;  89-310,  eff.
 8    1-1-96;  89-317,  eff. 8-11-95; 89-355, eff. 8-17-95; 89-567,
 9    eff. 7-26-96;  89-603,  eff.  8-2-96;  89-626,  eff.  8-9-96;
10    revised 9-13-96.)
11        Section  15.  The Savings Bank Act is amended by changing
12    Section 1008 as follows:
13        (205 ILCS 205/1008) (from Ch. 17, par. 7301-8)
14        Sec. 1008. General corporate powers.
15        (a)  A savings bank operating under this Act shall  be  a
16    body corporate and politic and shall have all of the specific
17    powers  conferred  by  this  Act and in addition thereto, the
18    following general powers:
19             (1)  To sue and be sued, complain, and defend in its
20        corporate name and to have a common seal,  which  it  may
21        alter or renew at pleasure.
22             (2)  To  obtain  and maintain insurance by a deposit
23        insurance corporation as defined in this Act.
24             (3)  To act as a fiscal agent for the United States,
25        the State of Illinois or any department, branch, arm,  or
26        agency  of  the  State or any unit of local government or
27        school district in the State, when  duly  designated  for
28        that   purpose,   and  as  agent  to  perform  reasonable
29        functions as may be required of it.
30             (4)  To  become  a  member  of  or  deal  with   any
31        corporation  or  agency of the United States or the State
32        of Illinois, to the extent that  the  agency  assists  in
HB0586 Enrolled            -15-                LRB9002584JSfg
 1        furthering  or facilitating its purposes or powers and to
 2        that end to  purchase  stock  or  securities  thereof  or
 3        deposit  money  therewith,  and  to comply with any other
 4        conditions of membership or credit.
 5             (5)  To make donations in reasonable amounts for the
 6        public welfare or for charitable, scientific,  religious,
 7        or educational purposes.
 8             (6)  To  adopt  and  operate  reasonable  insurance,
 9        bonus,  profit sharing, and retirement plans for officers
10        and  employees  and  for  directors  including,  but  not
11        limited to, advisory, honorary, and  emeritus  directors,
12        who are not officers or employees.
13             (7)  To  reject  any  application for membership; to
14        retire  deposit  accounts  by  enforced   retirement   as
15        provided  in  this  Act  and the bylaws; and to limit the
16        issuance of, or payments on, deposit  accounts,  subject,
17        however, to contractual obligations.
18             (8)  To  purchase  stock in service corporations and
19        to invest in any form  of  indebtedness  of  any  service
20        corporation   as   defined   in   this  Act,  subject  to
21        regulations of the Commissioner.
22             (9)  To  purchase  stock  of  a  corporation   whose
23        principal purpose is to operate a safe deposit company or
24        escrow service company.
25             (10)  To   exercise  all  the  powers  necessary  to
26        qualify as a trustee or custodian under federal or  State
27        law,  provided  that  the authority to accept and execute
28        trusts is subject to  the  provisions  of  the  Corporate
29        Fiduciary  Act and to the supervision of those activities
30        by the Commissioner of Banks and Real Estate.
31             (11)  (Blank).
32             (12)  To establish, maintain, and operate  terminals
33        as  authorized  by the Electronic Fund Transfer Act.  The
34        establishment, maintenance, operation,  and  location  of
HB0586 Enrolled            -16-                LRB9002584JSfg
 1        those  terminals  shall be subject to the approval of the
 2        Commissioner.
 3             (13)  Pledge its assets:
 4                  (A)  to enable it to act as agent for the  sale
 5             of obligations of the United States;
 6                  (B)  to secure deposits;
 7                  (C)  to   secure  deposits  of  money  whenever
 8             required by the National Bankruptcy Act;
 9                  (D)  to  qualify  under  Section  2-9  of   the
10             Corporate Fiduciary Act; and
11                  (E)  to  secure trust funds commingled with the
12             savings  bank's  funds,  whether  deposited  by  the
13             savings bank or an affiliate of the savings bank, as
14             required  under  Section  2-8   of   the   Corporate
15             Fiduciary Act.
16             (14)  To  accept for payment at a future date not to
17        exceed one year from the date of acceptance, drafts drawn
18        upon it by  its  customers;  and  to  issue,  advise,  or
19        confirm  letters of credit authorizing holders thereof to
20        draw drafts upon it or its correspondents.
21             (15)  Subject   to   the    regulations    of    the
22        Commissioner, to own and lease personal property acquired
23        by  the  savings  bank  at  the  request of a prospective
24        lessee and, upon the agreement of that person,  to  lease
25        the personal property.
26             (16)  To  establish  temporary service booths at any
27        International Fair in this State that is approved by  the
28        United  States Department of Commerce for the duration of
29        the international fair for the  purpose  of  providing  a
30        convenient  place for foreign trade customers to exchange
31        their  home  countries'  currency  into   United   States
32        currency  or the converse.  To provide temporary periodic
33        service to persons residing in a bona fide nursing  home,
34        senior  citizens'  retirement  home,  or  long-term  care
HB0586 Enrolled            -17-                LRB9002584JSfg
 1        facility.    These  powers  shall  not  be  construed  as
 2        establishing a new place or change of  location  for  the
 3        savings bank providing the service booth.
 4             (17)  To    indemnify   its   officers,   directors,
 5        employees, and agents,  as  authorized  for  corporations
 6        under  Section  8.75  of the Business Corporations Act of
 7        1983.
 8             (18)  To provide data processing services to  others
 9        on a for-profit basis.
10             (19)  To   utilize   any  electronic  technology  to
11        provide customers with home banking services.
12             (20)  Subject   to   the    regulations    of    the
13        Commissioner,  to  enter  into  an  agreement to act as a
14        surety.
15             (21)  Subject   to   the    regulations    of    the
16        Commissioner,   to  issue  credit  cards,  extend  credit
17        therewith, and otherwise  engage  in  or  participate  in
18        credit card operations.
19             (22)  To  purchase  for  its  own  account shares of
20        stock of a bankers' bank, described in  Section  13(b)(1)
21        of  the  Illinois  Banking  Act,  on  the  same terms and
22        conditions as a bank may purchase  such  shares.   In  no
23        event  shall  the  total  amount  of such stock held by a
24        savings bank an association in such bankers' bank  exceed
25        10%  of  its  capital  and  surplus  (including undivided
26        profits)  and  in  no  event  shall  a  savings  bank  an
27        association acquire more than 5% of any class  of  voting
28        securities of such bankers' bank.
29             (23)  Subject   to  Article  XLIV  of  the  Illinois
30        Insurance Code, to act as the agent for any  fire,  life,
31        or  other  insurance  company  authorized by the State of
32        Illinois,  by  soliciting  and  selling   insurance   and
33        collecting  premiums  on policies issued by such company;
34        and may receive for services so  rendered  such  fees  or
HB0586 Enrolled            -18-                LRB9002584JSfg
 1        commissions  as  may  be  agreed  upon  between  the said
 2        savings bank and the insurance company for which  it  may
 3        act  as  agent;  provided,  however, that no such savings
 4        bank shall in any case assume or guarantee the payment of
 5        any premium on  insurance  policies  issued  through  its
 6        agency  by  its principal; and provided further, that the
 7        savings  bank  shall  not  guarantee  the  truth  of  any
 8        statement made by an assured in filing his    application
 9        for insurance.
10        (b)  If  this  Act  fails to provide specific guidance in
11    matters  of  corporate  governance,  the  provisions  of  the
12    Business Corporation Act of 1983 may be used.
13    (Source: P.A. 88-112; 88-481; 88-670,  eff.  12-2-94;  89-74,
14    eff.  6-30-95;  89-310,  eff.  1-1-96;  89-317, eff. 8-11-95;
15    89-355, eff.  8-17-95;  89-508,  eff.  7-3-96;  89-603,  eff.
16    8-2-96; 89-626, eff. 8-9-96; revised 9-9-96.)
17        Section  20.  The Illinois Credit Union Act is amended by
18    changing Sections 13 and 55 as follows:
19        (205 ILCS 305/13) (from Ch. 17, par. 4414)
20        Sec. 13.  General Powers.  A credit union may:
21        (1)  Make contracts; sue and be sued;  adopt  and  use  a
22    common seal and alter same;
23        (2)  Acquire,  lease  (either as lessee or lessor), hold,
24    pledge, mortgage, sell and dispose of real  property,  either
25    in  whole  or  in  part,  or  any interest therein, as may be
26    necessary  or  is  incidental  to  its  present   or   future
27    operations  and  needs  subject to such limitations as may be
28    imposed thereon in rules and regulations promulgated  by  the
29    Director;  acquire, lease (either as lessee or lessor), hold,
30    pledge, mortgage, sell  and  dispose  or  personal  property,
31    either  in  whole or in part, or any interest therein, as may
32    be necessary or  is  incidental  to  its  present  or  future
HB0586 Enrolled            -19-                LRB9002584JSfg
 1    operations and needs;
 2        (3)  At the discretion of the Board of Directors, require
 3    the  payment  of an entrance fee or annual membership fee, or
 4    both, of any person admitted to membership;
 5        (4)  Receive savings from its  members  in  the  form  of
 6    shares of various classes, or special purpose share accounts;
 7    act  as  custodian  of its members' accounts; issue shares in
 8    trust as provided in this Act;
 9        (5)  Lend its funds  to  its  members  and  otherwise  as
10    hereinafter provided;
11        (6)  Borrow  from  any  source  in accordance with policy
12    established by the Board of Directors to a maximum of 50%  of
13    capital, surplus and reserves;
14        (7)  Discount and sell any obligations owed to the credit
15    union;
16        (8)  Honor  requests  for withdrawals or transfers of all
17    or any  part  of  member  share  accounts,  and  any  classes
18    thereof,  in any manner approved by the credit union Board of
19    Directors;
20        (9)  Sell all or  substantially  all  of  its  assets  or
21    purchase  all  or  substantially all of the assets of another
22    credit union, subject to the prior approval of the Director;
23        (10)  Invest surplus funds as provided in this Act;
24        (11)  Make deposits in banks, savings banks, savings  and
25    loan  associations,  trust  companies;  and invest in shares,
26    classes of shares  or  share  certificates  of  other  credit
27    unions;
28        (12)  Assess  charges  and  fees to members in accordance
29    with board resolution;
30        (13)  Hold membership in and pay dues to associations and
31    organizations; to invest in shares, stocks or obligations  of
32    any credit union organization;
33        (14)  Declare  dividends  and  pay  interest  refunds  to
34    borrowers as provided in this Act;
HB0586 Enrolled            -20-                LRB9002584JSfg
 1        (15)  Collect,  receive and disburse monies in connection
 2    with providing negotiable  checks,  money  orders  and  other
 3    money-type  instruments,  and  for such other purposes as may
 4    provide benefit or convenience to its members, and  charge  a
 5    reasonable fee for such services;
 6        (16)  Act  as  fiscal agent for and receive deposits from
 7    the federal government, this state or any agency or political
 8    subdivision thereof;
 9        (17)  Receive savings from  nonmembers  in  the  form  of
10    shares or share accounts in the case of credit unions serving
11    predominantly  low-income  members.   The  term  "low  income
12    members"  shall  mean those members whose annual income falls
13    at or below the lower level standard of living classification
14    as established by the Bureau of Labor Statistics and  updated
15    by  the  Employment  and  Training Administration of the U.S.
16    Department of Labor. The term "predominantly" is defined as a
17    simple majority; and
18        (18)  To establish, maintain, and  operate  terminals  as
19    authorized by the Electronic Fund Transfer Act; and
20        (19)  Subject  to  Article XLIV of the Illinois Insurance
21    Code, to act as the  agent  for  any  fire,  life,  or  other
22    insurance  company  authorized  by the  State of Illinois, by
23    soliciting and selling insurance and collecting  premiums  on
24    policies issued by such company; and may receive for services
25    so  rendered  such  fees or commissions as may be agreed upon
26    between the said credit union and the insurance  company  for
27    which  it  may  act as agent; provided, however, that no such
28    credit union shall  in  any  case  assume  or  guarantee  the
29    payment  of  any premium on insurance policies issued through
30    its agency by its principal; and provided further,  that  the
31    credit  union  shall not guarantee the truth of any statement
32    made by an assured in filing his application for insurance.
33    (Source: P.A. 88-235; 89-310, eff. 1-1-96.)
HB0586 Enrolled            -21-                LRB9002584JSfg
 1        (205 ILCS 305/55) (from Ch. 17, par. 4456)
 2        Sec. 55. Insurance for Members. (1) A  credit  union  may
 3    purchase or make available insurance for its members.
 4        (2)  A  credit union may enter into cooperative marketing
 5    arrangements to facilitate its members' voluntary purchase of
 6    insurance including, but  not  by  way  of  limitation,  life
 7    insurance,   disability   insurance,   accident   and  health
 8    insurance, property insurance, liability insurance and  legal
 9    expense insurance.
10        Nothing  in  this  Act shall be construed to allow credit
11    unions to engage in the retail sale  of  insurance  to  their
12    members.
13    (Source: P.A. 81-329.)
14        Section  25.   The  Corporate Fiduciary Act is amended by
15    changing Section 1-6 as follows:
16        (205 ILCS 620/1-6) (from Ch. 17, par. 1551-6)
17        Sec.  1-6.   General  Corporate  Powers.    A   corporate
18    fiduciary shall have the powers:
19        (a)  if  it  is  a State bank, those powers granted under
20    Sections 3 and 5 of the  Illinois  Banking  Act,  as  now  or
21    hereafter amended; and
22        (b)  if it is a State savings and loan association, those
23    powers granted under Sections 1-6 through 1-8 of the Illinois
24    Savings  and  Loan  Act of 1985, as now or hereafter amended;
25    and
26        (c)  if it is a corporation organized under the  Business
27    Corporation  Act  of 1983, as now or hereafter amended, those
28    powers granted in Sections 4.01 through 4.24  of  the  Trusts
29    and  Trustees Act, as now or hereafter amended, to the extent
30    the exercise of such powers by the  corporate  fiduciary  are
31    not  contrary to the instrument containing the appointment of
32    the corporate  fiduciary,  the  court  order  appointing  the
HB0586 Enrolled            -22-                LRB9002584JSfg
 1    corporate   fiduciary   or  any  other  statute  specifically
 2    limiting the power  of  the  corporate  fiduciary  under  the
 3    circumstances; and
 4        (d)  subject  to  Article  XLIV of the Illinois Insurance
 5    Code, to act as the  agent  for  any  fire,  life,  or  other
 6    insurance  company  authorized  by  the State of Illinois, by
 7    soliciting and selling insurance and collecting  premiums  on
 8    policies issued by such company; and may receive for services
 9    so  rendered  such  fees or commissions as may be agreed upon
10    between  the  said  corporate  fiduciary  and  the  insurance
11    company for which it may act  as  agent;  provided,  however,
12    that  no such corporate fiduciary shall in any case assume or
13    guarantee the payment of any premium  on  insurance  policies
14    issued  through  its  agency  by  its principal; and provided
15    further, that the corporate fiduciary shall not guarantee the
16    truth of any statement made  by  an  assured  in  filing  his
17    application for insurance.
18        The   Commissioner   may   specify  powers  of  corporate
19    fiduciaries generally or of a particular corporate  fiduciary
20    and  by  rule  or  order  limit  or  restrict  such powers of
21    corporate fiduciaries or a particular corporate fiduciary  if
22    he  finds the exercise of such power by corporate fiduciaries
23    generally or of the corporate  fiduciary  in  particular  may
24    tend to be an unsafe or unsound practice, or if such power is
25    otherwise  not  in  the  interest  of  beneficiaries  of  any
26    fiduciary appointment.
27    (Source: P.A. 86-754.)
28        Section  30.   The  Illinois Insurance Code is amended by
29    changing Section 499.1 and adding Article XLIV as follows:
30        (215 ILCS 5/499.1) (from Ch. 73, par. 1065.46-1)
31        Sec. 499.1.  Registered firms.
32        (a)  Any corporation or partnership transacting insurance
HB0586 Enrolled            -23-                LRB9002584JSfg
 1    business as an  insurance  agency  shall  register  with  the
 2    Director before transacting insurance business in this State.
 3    Such  registration shall remain in effect as long as the firm
 4    pays the annual fee required by Section 509.1 of this Code by
 5    the date due, unless the registration is revoked or suspended
 6    pursuant to Section 505.1 of this Code.
 7        (b)  Each firm required to register before  acting  as  a
 8    registered firm pursuant to this Article shall appoint one or
 9    more   licensed   insurance   producers   who  are  officers,
10    directors, or partners in the firm to be responsible for  the
11    firm's compliance with the insurance laws and Title 50 of the
12    Illinois Administrative Code.  Such individual or individuals
13    shall submit to the Director a registration form and the fees
14    required  by Section 509.1.  The Director shall prescribe the
15    registration form and may require  any  documents  reasonably
16    necessary   to   verify  the  information  contained  in  the
17    registration form. Within 30 days of a  change  in  officers,
18    directors,  or  partners  who are appointed to be responsible
19    for the firm's compliance with the insurance laws  and  Title
20    50 of the Illinois Administrative Code, the firm shall report
21    the change to the Department.
22        (c)  The  registered  firm  shall  inform the Director in
23    writing of a change in its business address within 30 days of
24    such change.
25        (d)  Each registered firm  shall  disclose  its  members,
26    officers  or directors who are authorized to act as insurance
27    producers, and report any changes in such  personnel  to  the
28    Director within 30 days of such changes.
29        (e)  (Blank).  A  registered  firm  may not be a national
30    bank located in a city, village or incorporated town  with  a
31    population  exceeding  5,000  according  to  the last federal
32    census, a State bank or a trust  company,  or  a  subsidiary,
33    affiliate,  officer or employee of any such national or State
34    bank or trust company contributing directly or indirectly  to
HB0586 Enrolled            -24-                LRB9002584JSfg
 1    the  income  of such bank or trust company any profit or fees
 2    or part thereof derived from the solicitation, negotiation or
 3    effecting of insurance.
 4    (Source: P.A. 89-240, eff. 1-1-96.)
 5        (215 ILCS 5/Art. XLIV heading new)
 6                Article XLIV. FINANCIAL INSTITUTIONS
 7                         INSURANCE SALES LAW
 8        (215 ILCS 5/1400 new)
 9        Sec. 1400.  Title.  This Article  may  be  cited  as  the
10    Financial Institutions Insurance Sales Law.
11        (215 ILCS 5/1401 new)
12        Sec.  1401.   Purpose.  The purpose of this Article is to
13    increase  the  availability  of  insurance  products  to  the
14    citizens  of  this  State  by  expanding   those   businesses
15    authorized  to  sell  insurance products to include financial
16    institutions, and to protect the interests of the citizens of
17    this State by regulating their  authority  to  do  so.   This
18    Article does not apply to activities or services conducted in
19    this  State  by  or  for  a financial institution that do not
20    require  licensure  as  an  insurance   producer,   temporary
21    insurance  producer,  limited  insurance  representative,  or
22    registered firm.
23        (215 ILCS 5/1402 new)
24        Sec.  1402.   Definitions.   For  the  purposes  of  this
25    Article:
26        "Financial institution" means:
27             (1)  a   State   bank,   a   national  bank,  or  an
28        out-of-state bank, as those  terms  are  defined  in  the
29        Illinois  Banking Act, or any subsidiary of a State bank,
30        a national bank, or an out-of-state bank;
HB0586 Enrolled            -25-                LRB9002584JSfg
 1             (2) a foreign banking corporation, as that  term  is
 2        defined  in  the  Foreign  Banking  Office  Act,  or  any
 3        subsidiary of a foreign banking corporation;
 4             (3)  a  corporate fiduciary, as that term is defined
 5        in the Corporate Fiduciary Act;
 6             (4) a savings bank organized under the Savings  Bank
 7        Act,  an  out-of-state  savings  bank chartered under the
 8        laws of a state other than Illinois, a territory  of  the
 9        United  States, or the District of Columbia, or a federal
10        savings  bank    organized  under  federal  law,  or  any
11        subsidiary of a savings  bank,  an  out-of-state  savings
12        bank or a federal savings bank;
13             (5)  an association or federal association, as those
14        terms are defined in the Illinois Savings and Loan Act of
15        1985, or any subsidiary  of  an  association  or  federal
16        association;
17             (6)  an  out-of-state  savings  and loan association
18        chartered under the laws of a state other than  Illinois,
19        a  territory  of  the  United  States  or the District of
20        Columbia, or  a  federal  savings  and  loan  association
21        organized  under  federal  law  whose  principal business
22        office is located outside of Illinois, or any  subsidiary
23        of  an  out-of-state  savings  and  loan  association  or
24        federal  savings  and  loan  association  whose principal
25        business office is located outside of Illinois; or
26             (7) a credit union as defined in the Illinois Credit
27        Union Act, or any subsidiary of a credit union.
28        To the extent that any  entity  other  than  a  financial
29    institution  conducts  insurance  activities in this State on
30    behalf of or on the premises of  the  financial  institution,
31    such entity shall be subject to this Article for the purposes
32    of those activities.
33        "Insurance"  means  all  lines  of  insurance defined and
34    regulated as insurance under this Code, but for the  purposes
HB0586 Enrolled            -26-                LRB9002584JSfg
 1    of  this Article, "insurance" shall not include the following
 2    lines of insurance, provided that this paragraph shall not be
 3    deemed to preclude  or  otherwise  limit  regulation  of  the
 4    following  lines  of  insurance pursuant to and to the extent
 5    otherwise provided by any other insurance law of this State:
 6             (1) credit life, credit accident and health,  credit
 7        involuntary  unemployment,  credit  casualty  and  credit
 8        property insurance;
 9             (2)   extended   service   contracts   and  warranty
10        agreements;
11             (3) insurance obtained  by  the  debtor  to  provide
12        payment  for the difference between the remaining balance
13        on a loan or other extension of credit and the amount  of
14        insurance coverage on the collateral securing the loan or
15        other extension of credit;
16             (4)  insurance  placed by a financial institution on
17        collateral used  in  connection  with  a  loan  or  other
18        extension   of   credit   when   a  debtor  breaches  the
19        contractual obligation to provide that insurance;
20             (5) title insurance regulated by the Title Insurance
21        Act; and
22             (6)  private  mortgage   insurance   and   financial
23        guarantee insurance.
24        (215 ILCS 5/1403 new)
25        Sec.   1403.    Licensure   requirements   for  financial
26    institutions.
27        (a)   A  financial  institution   transacting   insurance
28    business  in  this  State  shall  register  with the Director
29    pursuant to the Illinois Insurance Code and shall be  subject
30    to  the  laws, rules, and penalties of the Illinois Insurance
31    Code.
32        (b) The solicitation and sale of insurance by a financial
33    institution shall be conducted only by individuals  who  have
HB0586 Enrolled            -27-                LRB9002584JSfg
 1    been  issued  and  maintain  an  insurance producer's license
 2    pursuant to the Illinois Insurance Code and shall be  subject
 3    to  the  laws, rules, and penalties of the Illinois Insurance
 4    Code.
 5        (c)  For the  purposes  of  this  Section,  a  "financial
 6    institution"  means the subsidiary of a financial institution
 7    when  the  financial  institution  is  transacting  insurance
 8    business in this State only through the subsidiary.  For  the
 9    purposes  of  Section 499.1 of the Illinois Insurance Code, a
10    financial institution shall be deemed to be a corporation.
11        (215 ILCS 5/1404 new)
12        Sec.  1404.   Subsidiaries  or  divisions.   A  financial
13    institution  shall  not  qualify  for   registration   as   a
14    registered  firm under Section 499.1 of this Code unless: (1)
15    it  establishes  a  separate  subsidiary  that  acts  as  the
16    registered firm or (2) it is otherwise permitted  by  law  to
17    sell  insurance  directly  through the financial institution,
18    and it establishes a separate division within  the  financial
19    institution  to  conduct the business of the registered firm.
20    The subsidiary or division acting as a registered firm  shall
21    maintain   records   for   insurance  transactions  that  are
22    separate and distinct  from  the  records  of  the  financial
23    institution.
24        (215 ILCS 5/1405 new)
25        Sec.   1405.    Extensions   of   credit.    A  financial
26    institution shall not delay or impede  the  completion  of  a
27    loan   transaction   or   other  transactions  involving  the
28    extension  of  credit  for  the  purpose  of  influencing   a
29    customer's selection of any insurance product.
30        (215 ILCS 5/1406 new)
31        Sec.   1406.     Insurance   and   financial  institution
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 1    products.
 2        (a) No financial institution may offer  banking  products
 3    or  services,  or fix or vary the consideration of the offer,
 4    on a  condition  or  requirement  that  the  customer  obtain
 5    insurance  from the financial institution or any affiliate of
 6    the financial institution.
 7        (b) A financial institution that offers banking  products
 8    or  services in conformity with the provisions of Section 106
 9    of the Bank Holding Company Act Amendments of 1970 (12 U.S.C.
10    1972) shall be deemed to be in compliance with the provisions
11    of subsection (a) of this Section.
12        (c)  No  financial  institution  shall  require  that   a
13    customer or prospective customer of the financial institution
14    purchase  an insurance product from any particular registered
15    firm or insurance producer as a condition for the lending  of
16    money   or   extension   of   credit,  the  establishment  or
17    maintenance of a checking, savings, or other deposit account,
18    or the establishment or maintenance of a trust account.
19        (215 ILCS 5/1407 new)
20        Sec. 1407.  Rebating and discounting.
21        (a)  No financial institution may offer a  rebate  on  an
22    insurance product in violation of Section 151 of this Code.
23        (b)  No  financial  institution may offer a discount on a
24    loan or extension of credit for the purpose of  inducing  the
25    customer  to  purchase  insurance required in connection with
26    the loan or extension of credit.
27        (215 ILCS 5/1408 new)
28        Sec.  1408.   Discrimination  prohibited.   No  financial
29    institution may:
30        (1) require as a condition of providing  any  product  or
31    service or renewal of any contract for providing a product or
32    service  to any customer, that the customer acquire, finance,
HB0586 Enrolled            -29-                LRB9002584JSfg
 1    or negotiate any policy or contract of  insurance  through  a
 2    particular insurer, insurance producer, or registered firm;
 3        (2) in connection with a loan or extension of credit that
 4    requires  a borrower to obtain insurance, reject an insurance
 5    policy  solely  because  the  policy  has  been   issued   or
 6    underwritten  by  any  person  who is not associated with the
 7    financial institution;
 8        (3)  impose  any  discriminatory   requirement   on   any
 9    insurance  producer  who is not associated with the financial
10    institution that is not imposed on any insurance producer who
11    is associated with the financial institution; or
12        (4) if the financial institution is  a  registered  firm,
13    require  any  debtor, insurer, or insurance producer to pay a
14    separate charge in connection with the handling of  insurance
15    that  is required under a contract, unless: (i) the financial
16    institution is the registered firm  providing the  insurance,
17    (ii)  if the financial institution is not the registered firm
18    providing  the  insurance,  the  charge  would  be  uniformly
19    applied if the financial institution was the registered  firm
20    providing  the  insurance,  or  (iii) the charge is otherwise
21    permitted by this Code or other applicable State  or  federal
22    law.
23        (215 ILCS 5/1409 new)
24        Sec.  1409.   Disclosure.   A financial institution shall
25    clearly   and   conspicuously   disclose   in   any   written
26    advertisement  or  promotional  or   informational   material
27    regarding  an  insurance  product that the insurance offered,
28    recommended, sponsored, or sold:
29        (1) is not a deposit;
30        (2) is not  insured  by  the  Federal  Deposit  Insurance
31    Corporation,  or  in  the  case  of  a  credit  union, by the
32    National Credit Union Share Insurance Fund;
33        (3) is not guaranteed by the financial institution or  an
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 1    affiliated insured depository institution; and
 2        (4)   where   appropriate,   involves   investment  risk,
 3    including potential loss of principal.
 4        (215 ILCS 5/1410 new)
 5        Sec.  1410.   Misleading   advertising.    No   financial
 6    institution  or  registered firm may employ any advertisement
 7    that would mislead or otherwise cause a reasonable person  to
 8    believe  mistakenly that the State of Illinois or the federal
 9    government is responsible for the insurance sales  activities
10    of  the  financial institution or stands behind the financial
11    institution's credit, or that the financial institution,  the
12    State  of  Illinois, or the federal government guarantees any
13    returns on insurance products or is a source  of  payment  of
14    any   insurance  obligation  of  or  sold  by  the  financial
15    institution.
16        (215 ILCS 5/1411 new)
17        Sec. 1411.  Commissions and compensation.   No  financial
18    institution   shall   pay,   directly   or   indirectly,  any
19    commission,  service  fee,  brokerage,  or   other   valuable
20    consideration  to  any  person  for  services as an insurance
21    producer, temporary insurance producer, or limited  insurance
22    representative, or for such services by the person's members,
23    officers,  directors or employees, unless the person, and any
24    member,  officer,  director,  or  employee   performing   the
25    service,   held  a  valid  license  regarding  the  class  of
26    insurance as to which the service was rendered, or unless the
27    person was a properly registered firm at the time the service
28    was performed.  No  person,  other  than  a  person  properly
29    licensed  or  registered  in  accordance with Article XXXI of
30    this Code at the time the  person  performs  services  as  an
31    insurance  producer, temporary insurance producer, or limited
32    insurance  representative,  shall  accept   any   commission,
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 1    service  fee,  brokerage, or other valuable consideration for
 2    such services.  This Section shall  not  prevent  payment  or
 3    receipt of:
 4        (1)  renewal  or  other deferred commissions to or by any
 5    person entitled thereto under this Section;
 6        (2) fees to or by a financial institution  or  any  other
 7    person  for  services  that  do  not  require licensure as an
 8    insurance producer,  temporary  insurance  producer,  limited
 9    insurance representative, or registered firm; or
10        (3)  consideration  paid  to a financial institution by a
11    registered firm, insurance producer,  insurance  company,  or
12    any other person pursuant to any lease agreement.
13        (215 ILCS 5/1412 new)
14        Sec. 1412.  Solicitations to loan applicants.
15        (a)  A  financial institution that requires a customer to
16    obtain insurance in connection with a loan  or  extension  of
17    credit  and  that  offers  that  insurance either directly or
18    through an affiliate shall clearly disclose to  the  customer
19    in  writing  at the time of written application or at closing
20    if no written application is obtained in a form substantially
21    similar to the following:
22             "You may obtain  insurance  required  in  connection
23        with  your loan or extension of credit from any insurance
24        agent, broker, or firm that sells such  insurance.   Your
25        choice  of  insurance provider will not affect our credit
26        decision or your credit terms.".
27        (b)  This  Section  shall  not  apply  when  a  financial
28    institution is contacting a customer in the course of  direct
29    or  mass  marketing  to  a  group of persons in a manner that
30    bears no relation  to  the  customer's  loan  application  or
31    credit decision.
32        (215 ILCS 5/1413 new)
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 1        Sec.  1413.   Separate  physical location and sales force
 2    when insurance is solicited or  sold  in  connection  with  a
 3    loan.
 4        (a)   An  employee  of  a  financial  institution may not
 5    solicit or sell insurance at the  same   desk  where  a  loan
 6    transaction  is  conducted when the insurance is solicited or
 7    sold in connection with the same loan.
 8        (b) A loan officer of  a  financial  institution  who  is
 9    involved  in  the  application, solicitation, or closing of a
10    loan  transaction  may  not  solicit  or  sell  insurance  in
11    connection with the same loan,  but  such  loan  officer  may
12    refer  the loan customer to another insurance producer who is
13    not involved in the application, solicitation, or closing  of
14    the same loan transaction.
15        (c)  Subsections  (a)  and  (b) of this Section shall not
16    apply to a financial institution, other than a credit  union,
17    or a branch location of a financial institution, other than a
18    credit union, that has less than $100,000,000 in deposits.
19        (d)  Subsections  (a)  and  (b) of this Section shall not
20    apply to a credit union or a  branch  location  of  a  credit
21    union that has less than $30,000,000 in deposits.
22        (215 ILCS 5/1414 new)
23        Sec.  1414.   Signage.  Signs concerning the availability
24    of insurance products offered by the financial institution or
25    by any registered firm shall be clearly displayed in the same
26    area where applications for  loans  or  other  extensions  of
27    credit  are  being  taken  or  closed  and  shall include the
28    disclosure set forth in subsection (a) of Section 1412.
29        (215 ILCS 5/1415 new)
30        Sec. 1415.  Confidential customer information.
31        (a) A financial institution that is a registered firm may
32    not release a customer's insurance information to any  person
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 1    other   than   an  officer,  director,  employee,  agent,  or
 2    affiliate of the financial institution  without  the  written
 3    consent  of  the customer.  For the purposes of this Section,
 4    "insurance  information"  means  information  concerning  the
 5    premiums,   terms   and  conditions  of  insurance  coverage,
 6    insurance claims, and the insurance  history  of  a  customer
 7    contained in the financial institution's records.
 8        (b) Subsection (a) of this Section shall not apply to:
 9             (1)  names, addresses, and telephone numbers derived
10        in any manner from the financial  institution's  records,
11        or
12             (2)   the   release   of  insurance  information  as
13        otherwise authorized by State or federal law.
14        (c) A financial institution  shall  not  require  premium
15    information   when   requiring   evidence   of  insurance  in
16    connection with a loan or extension of credit and  shall  not
17    use  such  premium  information for the purpose of soliciting
18    insurance without the written consent of the customer.
19        (d)  A  financial  institution   may   not   use   health
20    information  obtained from a customer's insurance records for
21    any purpose other than for its  activities  as  a  registered
22    firm pursuant to this Code.
23        (215 ILCS 5/1416 new)
24        Sec.  1416.   Prohibited  defenses.  A  violation  of any
25    provision of this Article shall not be used as a  defense  by
26    any  person  in  any  action  by  a  financial institution to
27    recover the amount owing on any loan or extension of credit.
28        Section  35.  Severability.   The  provisions   of   this
29    amendatory  Act  of  1997  and  the  changes made to existing
30    statutory law by this amendatory Act of  1997  are  severable
31    under Section 1.31 of the Statute on Statutes.
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 1        Section  99.   Effective  date.  This Act takes effect on
 2    October 1, 1997.

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