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Public Act 098-0400





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
                (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
        (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.

Effective Date: 8/16/2013