State of Illinois
92nd General Assembly
Legislation

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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  in
13    Section 61 means when a credit union falls below a 2% capital
14    to 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; and
 5    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 Department annually  on  or  before
 5    the  first  day of February in each year on forms supplied by
 6    the 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 fee of $5.00 for 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,
17    or   delegates   substantially   all  managerial  duties  and
18    responsibilities when 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 regulatory examination fee 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.)".

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