State of Illinois
92nd General Assembly
Legislation

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92_HB3008

 
                                              LRB9203170JSpcA

 1        AN ACT concerning credit unions.

 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 Sections 1.1, 10, 12, 51, and 59 as follows:

 6        (205 ILCS 305/1.1) (from Ch. 17, par. 4402)
 7        Sec. 1.1.  Definitions.  As used in this Act:
 8        Credit   Union   -   The  term  "Credit  union"  means  a
 9    cooperative, non-profit association, incorporated under  this
10    Act,  under the laws of the United States of America or under
11    the laws of another state, for the  purposes  of  encouraging
12    thrift  among  its  members, creating a source of credit at a
13    reasonable rate of interest, and providing an opportunity for
14    its members to use and control their own money  in  order  to
15    improve  their economic and social conditions. The membership
16    of a credit union shall consist of a  group  or  groups  each
17    having a common  bond as set forth in this Act.
18        Common  Bond - The term "Common bond" refers to groups of
19    people who meet one of the following qualifications:
20             (1)  Persons belonging to  a  specific  association,
21        group  or  organization,  such  as a church, labor union,
22        club or society and members of their  immediate  families
23        which  shall include any relative by blood or marriage or
24        foster and adopted children.
25             (2)  Persons who reside in a reasonably compact  and
26        well  defined  neighborhood  or community, and members of
27        their immediate families which shall include any relative
28        by blood or marriage or foster and adopted children.
29             (3)  Persons who have a common employer or  who  are
30        members  of  an  organized  labor  union  or an organized
31        occupational  or  professional  group  within  a  defined
 
                            -2-               LRB9203170JSpcA
 1        geographical  area,  and  members  of   their   immediate
 2        families  which  shall  include  any relative by blood or
 3        marriage or foster and adopted children.
 4        Shares - The term "Shares" or "share accounts" means  any
 5    form  of shares issued by a credit union and established by a
 6    member in accordance with standards  specified  by  a  credit
 7    union,  including  but  not  limited  to common shares, share
 8    draft  accounts,  classes  of  shares,  share   certificates,
 9    special  purpose  share  accounts,  shares  issued  in trust,
10    custodial accounts, and  individual  retirement  accounts  or
11    other  plans established pursuant to Section 401(d) or (f) or
12    Section 408(a) of  the  Internal  Revenue  Code,  as  now  or
13    hereafter  amended,  or similar provisions of any tax laws of
14    the United States that may hereafter exist.
15        Credit  Union  Organization  -  The  term  "Credit  union
16    organization" means any organization established to serve the
17    needs of credit unions, the business of which relates to  the
18    daily operations of credit unions.
19        Department  -  The  term  "Department" means the Illinois
20    Department of Financial Institutions.
21        Director - The term "Director" means the Director of  the
22    Illinois Department of Financial Institutions.
23        NCUA  -  The  term "NCUA" means the National Credit Union
24    Administration, an agency of  the  United  States  Government
25    charged with the supervision of credit unions chartered under
26    the laws of the United States of America.
27        Central  Credit  Union  - The term "Central credit union"
28    means a credit union incorporated primarily to receive shares
29    from and make loans to credit unions and Directors, Officers,
30    committee members and employees of credit unions.  A  central
31    credit  union  may  also  accept  as members persons who were
32    members of credit unions which were  liquidated  and  persons
33    from  occupational  groups  not  otherwise  served by another
34    credit union.
 
                            -3-               LRB9203170JSpcA
 1        Corporate Credit  Union  -  The  term  "Corporate  credit
 2    union"   means   a  credit  union  which  is  a  cooperative,
 3    non-profit association, the membership of  which  is  limited
 4    primarily to other credit unions.
 5        Insolvent  - "Insolvent" means the condition that results
 6    when the total of all  liabilities  and  shares  exceeds  net
 7    assets of the credit union.
 8        Danger of insolvency - The term "Danger of insolvency" as
 9    used in Section 61 means when a credit union falls below a 2%
10    capital to asset ratio.
11        "Political  subdivision" includes, but is not limited to,
12    counties, townships, cities,  villages,  incorporated  towns,
13    school   districts,   and   any   agency,   corporation,   or
14    instrumentality of a state or its political subdivisions.
15    (Source: P.A. 90-665, eff. 7-30-98.)

16        (205 ILCS 305/10) (from Ch. 17, par. 4411)
17        Sec. 10.  Credit union records; member financial records.
18        (1)  A  credit  union shall establish and maintain books,
19    records, accounting systems and procedures  which  accurately
20    reflect  its  operations  and  which enable the Department to
21    readily ascertain the true financial condition of the  credit
22    union and whether it is complying with this Act.
23        (2)  A  photostatic  or  photographic reproduction of any
24    credit union records  shall  be  admissible  as  evidence  of
25    transactions with the credit union.
26        (3) (a)  For  the  purpose  of  this  Section,  the  term
27        "financial  records" means any original, any copy, or any
28        summary of (1) a document  granting  signature  authority
29        over  an  account,  (2) a statement, ledger card or other
30        record on any account which shows each transaction in  or
31        with respect to that account, (3) a check, draft or money
32        order drawn on a financial institution or other entity or
33        issued  and payable by or through a financial institution
 
                            -4-               LRB9203170JSpcA
 1        or  other  entity,  or  (4)  any  other  item  containing
 2        information pertaining to any relationship established in
 3        the ordinary course of business between  a  credit  union
 4        and its member.
 5             (b)  This Section does not prohibit:
 6                  (1)  The  preparation, examination, handling or
 7             maintenance of any financial records by any officer,
 8             employee or agent of a credit union  having  custody
 9             of  such records, or the examination of such records
10             by a certified public  accountant   engaged  by  the
11             credit union to perform an independent audit;
12                  (2)  The  examination  of any financial records
13             by or the  furnishing  of  financial  records  by  a
14             credit  union  to  any officer, employee or agent of
15             the   Department,   the   National   Credit    Union
16             Administration, Federal Reserve board or any insurer
17             of  share accounts for use solely in the exercise of
18             his duties as an officer, employee or agent;
19                  (3)  The publication  of  data  furnished  from
20             financial records relating to members where the data
21             cannot  be  identified to any particular customer of
22             account;
23                  (4)  The making of reports or returns  required
24             under  Chapter  61  of  the Internal Revenue Code of
25             1954;
26                  (5)  Furnishing  information   concerning   the
27             dishonor  of  any negotiable instrument permitted to
28             be disclosed under the Uniform Commercial Code;
29                  (6)  The exchange  in  the  regular  course  of
30             business  of  credit  information  between  a credit
31             union  and  other   credit   unions   or   financial
32             institutions  or commercial enterprises, directly or
33             through a consumer reporting agency;
34                  (7)  The  furnishing  of  information  to   the
 
                            -5-               LRB9203170JSpcA
 1             appropriate  law  enforcement  authorities where the
 2             credit union reasonably believes  it  has  been  the
 3             victim of a crime;
 4                  (8)  The  furnishing of information pursuant to
 5             the Uniform Disposition of Unclaimed Property Act;
 6                  (9)  The furnishing of information pursuant  to
 7             the  Illinois Income Tax Act and the Illinois Estate
 8             and Generation-Skipping Transfer Tax Act;
 9                  (10)  The furnishing of information pursuant to
10             the  federal  "Currency  and  Foreign   Transactions
11             Reporting   Act",  Title  31,  United  States  Code,
12             Section 1051 et sequentia; or
13                  (11)  The furnishing of information pursuant to
14             any  other  statute  which  by  its  terms   or   by
15             regulations   promulgated  thereunder  requires  the
16             disclosure  of  financial  records  other  than   by
17             subpoena, summons, warrant or court order.
18                  (12)  The    furnishing   of   information   in
19             accordance with the federal Personal  Responsibility
20             and Work Opportunity Reconciliation Act of 1996. Any
21             credit  union  governed by this Act shall enter into
22             an agreement for data exchanges with a State  agency
23             provided the State agency pays to the credit union a
24             reasonable   fee  not  to  exceed  its  actual  cost
25             incurred.  A credit union providing  information  in
26             accordance with this item shall not be liable to any
27             account holder or other person for any disclosure of
28             information  to  a  State agency, for encumbering or
29             surrendering any assets held by the credit union  in
30             response  to a lien or order to withhold and deliver
31             issued by a State agency, or for  any  other  action
32             taken pursuant to this item, including individual or
33             mechanical  errors,  provided  the  action  does not
34             constitute gross negligence or willful misconduct. A
 
                            -6-               LRB9203170JSpcA
 1             credit union  shall  have  no  obligation  to  hold,
 2             encumber,  or  surrender  assets  until  it has been
 3             served with a subpoena, summons, warrant,  court  or
 4             administrative order, lien, or levy.
 5                  (13)  The  furnishing  of  information  to  law
 6             enforcement  authorities, the Illinois Department on
 7             Aging and its regional administrative  and  provider
 8             agencies, the Department of Human Services Office of
 9             Inspector  General,  or  public  guardians,  if  the
10             credit  union  suspects  that  a  member  who  is an
11             elderly or disabled person has been  or  may  become
12             the   victim  of  financial  exploitation.  For  the
13             purposes of this item (13), the term:  (i)  "elderly
14             person"  means  a  person who is 60 or more years of
15             age, (ii) "disabled person" means a person  who  has
16             or  reasonably appears to the credit union to have a
17             physical or mental disability that  impairs  his  or
18             her  ability  to  seek  or obtain protection from or
19             prevent financial exploitation, and (iii) "financial
20             exploitation" means tortious or illegal use  of  the
21             assets  or  resources  of  an  elderly  or  disabled
22             person,    and    includes,    without   limitation,
23             misappropriation of the elderly or disabled person's
24             assets or resources by undue  influence,  breach  of
25             fiduciary    relationship,    intimidation,   fraud,
26             deception,  extortion,  or  the  use  of  assets  or
27             resources in any manner contrary to  law.  A  credit
28             union  or  person furnishing information pursuant to
29             this item (13) shall be entitled to the same  rights
30             and  protections  as a person furnishing information
31             under the  Elder  Abuse  and  Neglect  Act  and  the
32             Illinois Domestic Violence Act of 1986.
33        (c)  A  credit  union  may  not  disclose  to any person,
34    except to the  member  or  his  duly  authorized  agent,  any
 
                            -7-               LRB9203170JSpcA
 1    financial records relating to that member of the credit union
 2    unless:
 3             (1)  the  member  has  authorized  disclosure to the
 4        person;
 5             (2)  the financial records are disclosed in response
 6        to a lawful subpoena, summons,  warrant  or  court  order
 7        that  meets  the requirements of subparagraph (d) of this
 8        Section; or
 9             (3)  the credit union is attempting  to  collect  an
10        obligation  owed to the credit union and the credit union
11        complies  with  the  provisions  of  Section  2I  of  the
12        Consumer Fraud and Deceptive Business Practices Act.
13        (d)  A credit  union  shall  disclose  financial  records
14    under  subparagraph  (c)(2)  of  this  Section  pursuant to a
15    lawful subpoena, summons, warrant or court order  only  after
16    the  credit  union  mails  a  copy  of the subpoena, summons,
17    warrant  or  court  order  to  the  person  establishing  the
18    relationship with the credit union, if living, and  otherwise
19    his  personal  representative,  if  known,  at his last known
20    address by first  class  mail,  postage  prepaid  unless  the
21    credit  union  is  specifically prohibited from notifying the
22    person by order of court or by applicable  State  or  federal
23    law.  In  the  case  of a grand jury subpoena, a credit union
24    shall not mail a copy of a subpoena to any person pursuant to
25    this subsection if the subpoena was issued by  a  grand  jury
26    under  the  Statewide  Grand Jury Act or notifying the person
27    would  constitute  a  violation  of  the  federal  Right   to
28    Financial Privacy Act of 1978.
29        (e) (1)  Any  officer  or  employee of a credit union who
30        knowingly and wilfully  furnishes  financial  records  in
31        violation of this Section is guilty of a business offense
32        and  upon conviction thereof shall be fined not more than
33        $1,000.
34             (2)  Any person who knowingly and  wilfully  induces
 
                            -8-               LRB9203170JSpcA
 1        or attempts to induce any officer or employee of a credit
 2        union  to disclose financial records in violation of this
 3        Section  is  guilty  of  a  business  offense  and   upon
 4        conviction thereof shall be fined not more than $1,000.
 5        (f)  A  credit  union shall be reimbursed for costs which
 6    are  reasonably  necessary  and  which  have  been   directly
 7    incurred in searching for, reproducing or transporting books,
 8    papers,  records  or  other  data  of  a  member  required or
 9    requested to be  produced  pursuant  to  a  lawful  subpoena,
10    summons,  warrant or court order.  The Director may determine
11    the rates and conditions under which payment shall  be  made.
12    Delivery  of  requested  documents may be delayed until final
13    reimbursement of all costs is received.
14    (Source: P.A. 90-18, eff. 7-1-97; 91-929, eff. 12-15-00.)

15        (205 ILCS 305/12) (from Ch. 17, par. 4413)
16        Sec.   12.  Regulatory   fees   for    examination    and
17    administration.
18        (1)  A credit union regulated by the Department shall pay
19    a  regulatory  fee  to  the  Department  based upon its total
20    assets as shown by its Year-end Call Report at the  following
21    rates:
22    TOTAL ASSETS                   REGULATORY FEE
23    $25,000 or less .............. $100

24    Over $25,000 and not over
25    $100,000 ..................... $100 plus $4 per $1,000 of
26                                   assets in excess of $25,000
27    Over $100,000 and not over
28    $200,000 ..................... $400 plus $3 per $1,000 of
29                                   assets in excess of $100,000
30    Over $200,000 and not over
31    $500,000 ..................... $700 plus $2 per $1,000 of
32                                   assets in excess of $200,000
33    Over $500,000 and not over
 
                            -9-               LRB9203170JSpcA
 1    $1,000,000 ................... $1,300 plus $1.40 per $1,000
 2                                   of assets in excess of
 3                                   $500,000
 4    Over $1,000,000 and not
 5    over $5,000,000............... $2,000 plus $0.50 per
 6                                   $1,000 of assets in
 7                                   excess of $1,000,000
 8    Over $5,000,000 and not
 9    over $30,000,000 ............. $4,000 plus $0.35
10                                   per $1,000 assets
11                                   in excess of $5,000,000
12    Over $30,000,000 and not
13    over $100,000,000 ............ $12,750 plus $0.30
14                                   per $1,000 of assets in
15                                   excess of $30,000,000
16    Over $100,000,000 and not
17    over $500,000,000 ............ $33,750 plus $0.15 per
18                                   $1,000 of assets in excess
19                                   of  $100,000,000
20    Over $500,000,000 ............ $93,750 plus $0.05 per
21                                   $1,000 of assets in excess
22                                   of $500,000,000
23        (2)  The   Director   shall  review  the  regulatory  fee
24    schedule in subsection (1)  and  the  projected  earnings  on
25    those  fees on an annual basis and adjust the fee schedule no
26    more than 5% annually if necessary to  defray  the  estimated
27    administrative  and operational expenses of the Department as
28    defined in subsection (5).  The Director shall provide credit
29    unions with written notice of  any  adjustment  made  in  the
30    regulatory fee schedule.
31        (3)  Not  later  than  March  1  of each calendar year, a
32    credit union shall pay to the Department, for  the  preceding
33    calendar  year,  a  regulatory  fee for that calendar year in
34    accordance with the regulatory  fee  schedule  in  subsection
 
                            -10-              LRB9203170JSpcA
 1    (1), on the basis of assets as of the Year-end Call Report of
 2    the  preceding  year.   The  regulatory fee shall not be less
 3    than $100 or more than $125,000, provided that the regulatory
 4    fee cap of $125,000 shall be adjusted to incorporate the same
 5    percentage increase as the Director makes in  the  regulatory
 6    fee  schedule  from  time  to  time under subsection (2).  No
 7    regulatory fee shall be collected from a credit  union  until
 8    it has been in operation for one year.
 9        (4)  The   aggregate   of   all  fees  collected  by  the
10    Department under this Act shall be paid promptly  after  they
11    are  received  receipt of the same, accompanied by a detailed
12    statement thereof, into the State Treasury and shall  be  set
13    apart in the Credit Union Fund, a special fund hereby created
14    in  the  State  treasury.    The  amount  from  time  to time
15    deposited in the Credit Union  Fund  and  shall  be  used  to
16    offset  the  ordinary administrative and operational expenses
17    of the Department under this Act.  Investment  income  earned
18    on  the  money in the Fund shall be deposited into and become
19    part of the Fund.
20        (5)  The administrative and operational expenses for  any
21    calendar year shall mean the ordinary and contingent expenses
22    for  that year incidental to making the examinations provided
23    for by,  and  for  administering,  this  Act,  including  all
24    salaries  and  other  compensation paid for personal services
25    rendered for the State by officers or employees of the  State
26    to  enforce  this  Act;  all  expenditures  for telephone and
27    telegraph  charges,  postage  and  postal   charges,   office
28    supplies  and services, furniture and equipment, office space
29    and maintenance thereof, travel expenses and other  necessary
30    expenses;  all  to  the  extent  that  such  expenditures are
31    directly incidental to such examination or administration.
32        (6)  When the aggregate of  all  fees  collected  by  the
33    Department  under  this  Act and all earnings thereon for any
34    calendar year exceeds 150% of the  total  administrative  and
 
                            -11-              LRB9203170JSpcA
 1    operational  expenses  under  this  Act  for  that year, such
 2    excess shall be credited to credit unions and applied against
 3    their regulatory fees for the subsequent  year.   The  amount
 4    credited to a credit union shall be in the same proportion as
 5    the  fee  paid  by such credit union for the calendar year in
 6    which the excess is produced bears to the  aggregate  of  the
 7    fees  collected by the Department under this Act for the same
 8    year.
 9        (7)  Examination  fees  for  the  year   2000   statutory
10    examinations paid pursuant to the examination fee schedule in
11    effect  at  that time shall be credited toward the regulatory
12    fee to be assessed the credit union in calendar year 2001.
13        (8)  Nothing in  this  Act  shall  prohibit  the  General
14    Assembly  from appropriating funds to the Department from the
15    General Revenue Fund for the purpose  of  administering  this
16    Act.
17    (Source: P.A. 91-755, eff. 1-1-01.)

18        (205 ILCS 305/51) (from Ch. 17, par. 4452)
19        Sec. 51.  Other Loan Programs.
20        (1)  Subject   to  such  rules  and  regulations  as  the
21    Director may promulgate, a credit union  may  participate  in
22    loans  to  credit  union  members  jointly  with other credit
23    unions,  credit   union   organizations,   corporations,   or
24    financial  institutions.   An  originating  credit  union may
25    originate  participation  loans  to  its  own   members.    A
26    participating credit union that is not the originating lender
27    may  participate  in  loans  made  to  its  own members or to
28    members of another participating credit  union.  "Originating
29    lender"  means  the participating credit union with which the
30    member contracts.  A master participation agreement  must  be
31    properly  executed, and the agreement must include provisions
32    for identifying, either  through  documents  incorporated  by
33    reference  or  directly  in  the agreement, the participation
 
                            -12-              LRB9203170JSpcA
 1    loan or loans prior to their sale.
 2        (2)  Any credit union with assets of $500,000 or more may
 3    loan to its members under the State Scholarships Law or other
 4    scholarship programs which are subject to a federal or  state
 5    law providing 100% repayment guarantee.
 6        (3)  A  credit  union  may  purchase  from any source the
 7    conditional sales contracts, notes  and  similar  instruments
 8    which  evidence  an  indebtedness  of  its members.  A credit
 9    union may sell to any source the loans of its members.
10        (4)  With approval of the Board of  Directors,  a  credit
11    union may make loans, either on its own or jointly with other
12    credit  unions,  corporations  or  financial institutions, to
13    credit union  organizations;  provided,  that  the  aggregate
14    amount  of  all  such loans outstanding shall not at any time
15    exceed 1% of the paid-in and unimpaired capital  and  surplus
16    of the credit union.
17    (Source: P.A. 81-329.)

18        (205 ILCS 305/59) (from Ch. 17, par. 4460)
19        Sec. 59.  Investment of Funds. Funds not used in loans to
20    members  may  be  invested,  pursuant  to  subsection  (7) of
21    Section 30 of this Act, and subject to Departmental rules and
22    regulations:
23        (1)  In securities, obligations or other  instruments  of
24    or issued by or fully guaranteed as to principal and interest
25    by  the  United States of America or any agency thereof or in
26    any trust or trusts established  for  investing  directly  or
27    collectively in the same;
28        (2)  In  obligations  of  any state of the United States,
29    the District of Columbia, the Commonwealth  of  Puerto  Rico,
30    and  the  several  territories  organized by Congress, or any
31    political subdivision thereof; however, a  credit  union  may
32    not  invest  more  than  10%  of  its  unimpaired capital and
33    surplus in  the  obligations  of  one  issuer,  exclusive  of
 
                            -13-              LRB9203170JSpcA
 1    general   obligations  of  the  issuer,  and  investments  in
 2    municipal securities must be limited to securities  rated  in
 3    one  of  the  4  highest  rating  categories  by a nationally
 4    recognized statistical rating organization;
 5        (3)  In certificates of deposit or passbook type accounts
 6    issued by a state or national bank, mutual  savings  bank  or
 7    savings and loan association; provided that such institutions
 8    have  their accounts insured by the Federal Deposit Insurance
 9    Corporation  or  the  Federal  Savings  and  Loan   Insurance
10    Corporation;  but  provided,  further,  that a credit union's
11    investment in an account in any one  institution  may  exceed
12    the insured limit on accounts;
13        (4)  In  shares,  classes of shares or share certificates
14    of  other  credit  unions,  including,  but  not  limited  to
15    corporate credit unions; provided  that  such  credit  unions
16    have  their  members'  accounts  insured by the NCUA or other
17    approved insurers, and that if the members' accounts  are  so
18    insured,  a  credit union's investment may exceed the insured
19    limit on accounts;
20        (5)  In shares of a cooperative society  organized  under
21    the  laws  of  this State or the laws of the United States in
22    the total amount not exceeding 10% of the unimpaired  capital
23    and   surplus   of  the  credit  union;  provided  that  such
24    investment shall first be approved by the Department;
25        (6)  In  obligations  of  the   State   of   Israel,   or
26    obligations  fully  guaranteed  by  the State of Israel as to
27    payment of principal and interest;
28        (7)  In shares, stocks or obligations of other  financial
29    institutions  in  the  total  amount  not exceeding 5% of the
30    unimpaired capital and surplus of the credit union;
31        (8)  In federal funds and bankers' acceptances;
32        (9)  In  shares  or  stocks  of  Credit   Union   Service
33    Organizations  in  the  total  amount not exceeding 1% of the
34    unimpaired capital and surplus of the credit union.
 
                            -14-              LRB9203170JSpcA
 1    (Source: P.A. 86-432.)

 2        Section 99.  Effective date.  This Act takes effect  upon
 3    becoming law.

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