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92_HB4357ham001 LRB9212373JScsam 1 AMENDMENT TO HOUSE BILL 4357 2 AMENDMENT NO. . Amend House Bill 4357 on page 1 by 3 replacing line 5 with the following: 4 "changing Sections 1.1, 7, 8, 9, 13, 16, 20, 23, 27, 30, 42, 5 and 61 and"; and 6 on page 3 by replacing lines 9, 10, and 11 with the 7 following: 8 "Danger of insolvency - For purposes of Section 61, a 9 credit union is in "danger of insolvency" if its net worth to 10 asset ratio falls below 2% or if the Department is unable to 11 ascertain, upon examination, the true financial condition of 12 the credit union.The term "Danger of insolvency" as used in13Section 61 means when a credit union falls below a 2% capital14to asset ratio."; and 15 on page 4 by inserting immediately below line 10 the 16 following: 17 "(205 ILCS 305/8) (from Ch. 17, par. 4409) 18 Sec. 8. Director's powers and duties. Credit unions are 19 regulated by the Department. The Director, in executing the 20 powers and discharging the duties vested by law in the 21 Department has the following powers and duties: 22 (1) To exercise the rights, powers and duties set forth 23 in this Act or any related Act. -2- LRB9212373JScsam 1 (2) To prescribe rules and regulations for the 2 administration of this Act. The provisions of the Illinois 3 Administrative Procedure Act are hereby expressly adopted and 4 incorporated herein as though a part of this Act, and shall 5 apply to all administrative rules and procedures of the 6 Department under this Act. 7 (3) To direct and supervise all the administrative and 8 technical activities of the Department including the 9 employment of a Credit Union Supervisor who shall have 10 knowledge in the theory and practice of, or experience in, 11 the operations or supervision of financial institutions, 12 preferably credit unions, and such other persons as are 13 necessary to carry out his functions. 14 (4) To issue cease and desist orders when in the opinion 15 of the Director, a credit union is engaged or has engaged, or 16 the Director has reasonable cause to believe the credit union 17 is about to engage, in an unsafe or unsound practice, or is 18 violating or has violated or the Director has reasonable 19 cause to believe is about to violate a law, rule or 20 regulation or any condition imposed in writing by the 21 Department. 22 (5) To suspend from office and to prohibit from further 23 participation in any manner in the conduct of the affairs of 24 his credit union any director, officer or committee member 25 who has committed any violation of a law, rule, regulation or 26 of a cease and desist order or who has engaged or 27 participated in any unsafe or unsound practice in connection 28 with the credit union or who has committed or engaged in any 29 act, omission, or practice which constitutes a breach of his 30 fiduciary duty as such director, officer or committee member, 31 when the Director has determined that such action or actions 32 have resulted or will result in substantial financial loss or 33 other damage that seriously prejudices the interests of the 34 members. -3- LRB9212373JScsam 1 (6) Except for the fees established in this Act, to 2 prescribe, by rule and regulation, fees and penalties for 3 preparing, approving, and filing reports and other 4 documents;,furnishing transcripts;,holding hearings;and5 investigating applications for permission to organize, merge, 6 or convert; failure to maintain accurate books and records to 7 enable the Department to conduct an examination; and taking 8 supervisory actions. 9 (7) To destroy, in his discretion, any or all books and 10 records of any credit union in his possession or under his 11 control after the expiration of three years from the date of 12 cancellation of the charter of such credit unions. 13 (8) To make investigations and to conduct research and 14 studies and to publish some of the problems of persons in 15 obtaining credit at reasonable rates of interest and of the 16 methods and benefits of cooperative saving and lending for 17 such persons. 18 (9) To authorize, foster or establish experimental, 19 developmental, demonstration or pilot projects by public or 20 private organizations including credit unions which: 21 (a) promote more effective operation of credit 22 unions so as to provide members an opportunity to use and 23 control their own money to improve their economic and 24 social conditions; or 25 (b) are in the best interests of credit unions, 26 their members and the people of the State of Illinois. 27 (10) To cooperate in studies, training or other 28 administrative activities with, but not limited to, the NCUA, 29 other state credit union regulatory agencies and industry 30 trade associations in order to promote more effective and 31 efficient supervision of Illinois chartered credit unions. 32 (Source: P.A. 91-357, eff. 7-29-99.) 33 (205 ILCS 305/9) (from Ch. 17, par. 4410) -4- LRB9212373JScsam 1 Sec. 9. Reports and examinations. 2 (1) Credit unions shall report to the Department on 3 forms supplied by the Department, in accordance with a 4 schedule published by the Departmentannually on or before5the first day of February in each year on forms supplied by6the Department. A recapitulation of the Annual Reports shall 7 be compiled and published annually by the Department, for the 8 use of the General Assembly, credit unions, various 9 educational institutions and other interested parties. A 10 credit union which fails to file any report when due shall 11 pay to the Department a late filing feeof $5.00for each day 12 the report is overdue as prescribed by rule. The Director may 13 extend the time for filing a report. 14 (2) The Director may require special examinations of and 15 special financial reports from a credit union or a credit 16 union organization in which a credit union loans or,invests,17or delegates substantially all managerial duties and18responsibilitieswhen he determines that such examinations 19 and reports are necessary to enable the Department to 20 determine the safety of a credit union's operation or its 21 solvency. The cost to the Department of the aforesaid special 22 examinations shall be borne by the credit union being 23 examined as prescribed by rule. 24 (3) All credit unions incorporated under this Act shall 25 be examined at least biennially by the Department or, at the 26 discretion of the Director, by a public accountant registered 27 by the Department of Professional Regulation. The costs of an 28 examination shall be paid by the credit union. The scope of 29 all examinations by a public accountant shall be at least 30 equal to the examinations made by the Department. The 31 examiners shall have full access to, and may compel the 32 production of, all the books, papers, securities and accounts 33 of any credit union. A special examination shall be made by 34 the Department or by a public accountant approved by the -5- LRB9212373JScsam 1 Department upon written request of 5 or more members, who 2 guarantee the expense of the same. Any credit union refusing 3 to submit to an examination when ordered by the Department 4 shall be reported to the Attorney General, who shall 5 institute proceedings to have its charter revoked. If the 6 Director determines that the examination of a credit union is 7 to be conducted by a public accountant registered by the 8 Department of Professional Regulation and the examination is 9 done in conjunction with the credit union's external 10 independent audit of financial statements, the requirements 11 of this Section and subsection (3) of Section 34 shall be 12 deemed met. 13 (4) A copy of the completed report of examination and a 14 review comment letter, if any, citing exceptions revealed 15 during the examination, shall be submitted to the credit 16 union by the Department. A detailed report stating the 17 corrective actions taken by the Board of Directors on each 18 exception set forth in the review comment letter shall be 19 filed with the Department within 40 days after the date of 20 the review comment letter, or as otherwise directed by the 21 Department. Any credit union through its officers, directors, 22 committee members or employees, which willfully provides 23 fraudulent or misleading information regarding the corrective 24 actions taken on exceptions appearing in a review comment 25 letter may have its operations restricted to the collection 26 of principal and interest on loans outstanding and the 27 payment of normal expenses and salaries until all exceptions 28 are corrected and accepted by the Department. 29 (Source: P.A. 91-755, eff. 1-1-01.)"; and 30 on page 5, line 9, by changing "and to" to "to"; and 31 on page 5 by replacing line 10 with the following: 32 "all or part of the assets of the credit union; and where 33 disclosure is"; and -6- LRB9212373JScsam 1 on page 6, line 20, by changing "by" to "from"; and 2 on page 16 by inserting immediately below line 32 the 3 following: 4 "(205 ILCS 305/61) (from Ch. 17, par. 4462) 5 Sec. 61. Suspension. 6 (1) If the Director determines that any credit union is 7 bankrupt, insolvent, impaired or that it has willfully 8 violated this Act, or is operating in an unsafe or unsound 9 manner, he shall issue an order temporarily suspending the 10 credit union's operations for not more than 60 days. The 11 Board of Directors shall be given notice by registered or 12 certified mail of such suspension, which notice shall include 13 the reasons for such suspension and a list of specific 14 violations of the Act. The Director shall also notify the 15 members of the Credit Union Board of Advisors of any 16 suspension. The Director may assess to the credit union a 17 penalty, not to exceed the regulatoryexaminationfee as set 18 forth in this Act, to offset costs incurred in determining 19 the condition of the credit union's books and records. 20 (2) Upon receipt of such suspension notice, the credit 21 union shall cease all operations, except those authorized by 22 the Director, or the Director may appoint a Manager-Trustee 23 to operate the credit union during the suspension period. 24 The Board of Directors shall, within 10 days of the receipt 25 of the suspension notice, file with the Director a reply to 26 the suspension notice by submitting a corrective plan of 27 action or a request for formal hearing on said action 28 pursuant to the Department's rules and regulations. 29 (3) Upon receipt from the suspended credit union of 30 evidence that the conditions causing the order of suspension 31 have been corrected, and after determining that the proposed 32 corrective plan of action submitted is factual, the Director 33 shall revoke the suspension notice, permit the credit union 34 to resume normal operations, and notify the Board of Credit -7- LRB9212373JScsam 1 Union Advisors of such action. 2 (4) If the Director determines that the proposed 3 corrective plan of action will not correct such conditions, 4 he may take possession and control of the credit union. The 5 Director may permit the credit union to operate under his 6 direction and control and may appoint a Manager-Trustee to 7 manage its affairs until such time as the condition requiring 8 such action has been remedied, or in the case of insolvency 9 or danger of insolvency where an emergency requiring 10 expeditious action exists, the Director may involuntarily 11 merge the credit union without the vote of the suspended 12 credit union's Board of Directors or members (hereafter 13 involuntary merger) subject to rules promulgated by the 14 Director. No credit union shall be required to serve as a 15 surviving credit union in any involuntary merger. Upon the 16 request of the Director, a credit union by a vote of a 17 majority of its Board of Directors may elect to serve as a 18 surviving credit union in an involuntary merger. If the 19 Director determines that the suspended credit union should be 20 liquidated, he may appoint a Liquidating Agent and require of 21 that person such bond and security as he considers proper. 22 (5) Upon receipt of a request for a formal hearing, the 23 Director shall conduct proceedings pursuant to rules and 24 regulations of the Department. The credit union may request 25 the appropriate court to stay execution of such action. 26 Involuntary liquidation or involuntary merger may not be 27 ordered prior to the conclusion of suspension procedures 28 outlined in this Section. 29 (6) If, within the suspension period, the credit union 30 fails to answer the suspension notice or fails to request a 31 formal hearing, or both, the Director may then (i) 32 involuntarily merge the credit union if the credit union is 33 insolvent or in danger of insolvency and an emergency 34 requiring expeditious action exists or (ii) revoke the credit -8- LRB9212373JScsam 1 union's charter, appoint a Liquidating Agent and liquidate 2 the credit union. 3 (Source: P.A. 90-665, eff. 7-30-98.)".