Public Act 098-0400
 
HB1572 EnrolledLRB098 09750 MGM 39899 b


  
    AN ACT concerning regulation.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  
 
 
    Section 5. The Illinois Credit Union Act is amended  by 
changing Section 8 as follows:
 



    (205 ILCS 305/8)  (from Ch. 17, par. 4409)



    Sec. 8. Secretary's powers and duties. Credit unions are 
regulated by the
Department. The Secretary in executing the 
powers and discharging the duties
vested by law in the 
Department has the following powers and duties:


        (1) To exercise the rights, powers and duties set forth 
    in this Act or
any related Act. The Director shall oversee 
    the functions of the Division and report to the Secretary, 
    with respect to the Director's exercise of any of the 
    rights, powers, and duties vested by law in the Secretary 
    under this Act. All references in this Act to the Secretary 
    shall be deemed to include the Director, as a person 
    authorized by the Secretary or this Act to assume 
    responsibility for the oversight of the functions of the 
    Department relating to the regulatory supervision of 
    credit unions under this Act. 


        (2) To prescribe rules and regulations for the 
    administration of this
Act. The provisions of the Illinois 
    Administrative Procedure Act are hereby
expressly adopted 
    and incorporated herein
as though a part of this Act, and 
    shall apply to all administrative rules
and procedures of 
    the Department under this Act.


        (3) To direct and supervise all the administrative and 
    technical
activities
of the Department including the 
    employment of a Credit Union Supervisor
who shall have 
    knowledge in the theory and practice of, or experience in, 
    the
operations or supervision of financial institutions, 
    preferably credit unions,
and such other persons as are 
    necessary to carry out his functions. The Secretary shall 
    ensure that all examiners appointed or assigned to examine 
    the affairs of State-chartered credit unions possess the 
    necessary training and continuing education to effectively 
    execute their jobs.


        (4) To issue cease and desist orders when in the 
    opinion of the Secretary,
a credit union is engaged or has 
    engaged, or the Secretary has reasonable
cause to believe 
    the credit union is about to engage, in an unsafe or 
    unsound
practice, or is violating or has violated or the 
    Secretary has reasonable
cause to believe is about to 
    violate a law, rule or regulation or any condition
imposed 
    in writing by the Department.


        (5) To suspend from office and to prohibit from further 
    participation
in any manner in the conduct of the affairs 
    of his credit union any director,
officer or committee 
    member who has committed any violation of a law, rule,

    regulation or of a cease and desist order or who has 
    engaged or participated
in any unsafe or unsound practice 
    in connection with the credit union or
who has committed or 
    engaged in any act, omission, or practice which
constitutes 
    a breach of his fiduciary duty as such director, officer or

    committee member, when the Secretary has determined that 
    such action or actions
have resulted or will result in 
    substantial financial loss or other damage that
seriously 
    prejudices the interests of the members.

        (6) To assess a civil penalty against a credit union 
    for a violation of this Act, any rule adopted in accordance 
    with this Act, any order of the Secretary issued under his 
    or her authority under this Act, or any other action that 
    in the Secretary's discretion is an unsafe or unsound 
    practice provided that:
            (A) the Secretary reasonably determines, based on 
        objective facts and an accurate assessment of 
        applicable legal standards, that the credit union has: 
                (i) committed a violation of this Act, any rule 
            adopted in accordance with this Act, or any order 
            of the Secretary issued pursuant to his or her 
            authority under this Act; or
                (ii) engaged or participated in any unsafe or 
            unsound practice; 
            (B)  before a civil penalty is assessed under this 
        item (6), the Secretary must make the further 
        reasonable determination, based on objective facts and 
        an accurate assessment of applicable legal standards, 
        that the credit union's action constituting a 
        violation under subparagraph (i) of paragraph (A) of 
        item (6) or an unsafe and unsound practice under 
        subparagraph (ii) of paragraph (A) of item (6):
                (i)  directly resulted in a substantial and 
            material financial loss or created a reasonable 
            probability that a substantial and material 
            financial loss will directly result; or
                (ii)  constituted willful misconduct or a 
            material breach of fiduciary duty of any director, 
            officer, or committee member of the credit union; 
            Material financial loss, as referenced in this 
        paragraph (B), shall be assessed in light of 
        surrounding circumstances and the relative size and 
        nature of the financial loss or probable financial 
        loss.  Certain benchmarks shall be used in determining 
        whether financial loss is material, such as a 
        percentage of total assets or total gross income for 
        the immediately preceding 12-month period.  Absent 
        compelling and extraordinary circumstances, no civil 
        penalty shall be assessed, unless the financial loss or 
        probable financial loss is equal to or greater than 
        either 1% of the credit union's total assets for the 
        immediately preceding 12-month period, or 1% of the 
        credit union's total gross income for the immediately 
        preceding 12-month period, whichever is less; 
            (C) (A)  before a civil penalty is assessed under 
        this item (6), the credit union must be expressly 
        advised in writing of the:
                (i) specific violation that could subject it 
            to a penalty under this item (6); and
                (ii) the specific remedial action to be taken 
            within a specific and reasonable time frame to 
            avoid imposition of the penalty; . 
            (D) Civil penalties assessed under this item (6) 
        shall be remedial, not punitive, and reasonably 
        tailored to ensure future compliance by the credit 
        union with the provisions of this Act and any rules 
        adopted pursuant to this Act; 
            (E) (B) a credit union's failure to take timely 
        remedial action with respect to the specific violation 
        may result in the issuance of an order assessing a 
        civil penalty up to the following maximum amount, based 
        upon the total assets of the credit union:
                (i)   Credit unions with assets of less than $10 
            million................................................$1,000
                (ii)  Credit unions with assets of at least $10 
            million and less than $50 million......................$2,500
                (iii) Credit unions with assets of at least $50 
            million and less than $100 million.....................$5,000
                (iv) Credit unions with assets of at least $100 
            million and less than $500 million....................$10,000
                (v)  Credit unions with assets of at least $500 
            million and less than $1 billion......................$25,000
                (vi) Credit unions with assets of $1 billion 
            and greater......................................$50,000; and 
            (F) (C) an order assessing a civil penalty under 
        this item (6) shall take effect upon service of the 
        order, unless the credit union makes a written request 
        for a hearing under 38 IL. Adm. Code 190.20 of the 
        Department's rules for credit unions within 90 days 
        after issuance of the order; in .  In that event, the 
        order shall be stayed until a final administrative 
        order is entered. ; and 
            (D) in the event a credit union commits a 
        subsequent violation that is substantially similar to 
        the initial violation for which a cure period under 
        paragraph (A) of this item (6) was provided the credit 
        union, no additional cure period shall be required 
        before another order is issued assessing a civil 
        penalty for the subsequent violation.  Any such order 
        shall take effect upon service of the order, subject to 
        the credit union's right to request a hearing as 
        described in paragraph (C) of this item (6).  If a 
        hearing is requested, the order shall be stayed until a 
        final administrative order is entered.
        This item (6) shall not apply to violations separately 
    addressed in rules as authorized under item (7) of this 
    Section. 

        (7) Except for the fees established in this Act, to 
    prescribe, by rule
and regulation, fees and penalties for 
    preparing, approving, and filing
reports and other 
    documents; furnishing
transcripts; holding hearings; 
    investigating applications
for permission to
organize, 
    merge, or convert; failure to maintain accurate books and 
    records
to enable the Department to conduct an examination; 
    and taking supervisory
actions.


        (8) To destroy, in his discretion, any or all books and 
    records of any
credit union in his possession or under his 
    control after the expiration
of three years from the date 
    of cancellation of the charter of such credit
unions.


        (9) To make investigations and to conduct research and 
    studies and to
publish some of the problems of persons in 
    obtaining credit at reasonable
rates of interest and of the 
    methods and benefits of cooperative saving
and lending for 
    such persons.


        (10) To authorize, foster or establish experimental, 
    developmental,
demonstration or pilot projects by public 
    or private organizations including
credit unions which:


            (a) promote more effective operation of credit 
        unions so as to provide
members an opportunity to use 
        and control their own money to improve their
economic 
        and social conditions; or


            (b) are in the best interests of credit unions, 
        their members and the
people of the State of Illinois.


        (11) To cooperate in studies, training or other 
    administrative activities
with, but not limited to, the 
    NCUA, other state credit union regulatory
agencies and 
    industry trade associations in order to promote more 
    effective
and efficient supervision of Illinois chartered 
    credit unions.

(Source: P.A. 97-133, eff. 1-1-12.)

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