Full Text of HB4462 102nd General Assembly
HB4462ham002 102ND GENERAL ASSEMBLY | Rep. Jay Hoffman Filed: 3/1/2022
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| 1 | | AMENDMENT TO HOUSE BILL 4462
| 2 | | AMENDMENT NO. ______. Amend House Bill 4462 on page 1, | 3 | | line 5, by deleting "29,"; and
| 4 | | on page 1, line 19, by replacing " Section " with " Section 15 | 5 | | or "; and | 6 | | on page 2, line 1, after " union ", by inserting " in accordance | 7 | | with the terms of the credit union's written business plan | 8 | | submitted to the Secretary under subsection (e) "; and | 9 | | on page 3, by replacing lines 1 through 9 with the following:
| 10 | | " must submit the business plan to the Secretary. The Secretary | 11 | | may, in his or her sole discretion, approve the business plan, | 12 | | disapprove the business plan, or require the credit union to | 13 | | modify the business plan to seek approval of the target market | 14 | | as an occupational, community, or associational common bond or | 15 | | common bonds, pursuant to 38 Ill. Adm. Code 190.10. The credit |
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| 1 | | union must be advised in writing of the findings of the | 2 | | Secretary in support of the determination and the specific and | 3 | | reasonable time period in which to file a modified plan. If the | 4 | | Secretary approves the business plan, the credit union shall | 5 | | be required to add the target market to its field of | 6 | | membership. "; and | 7 | | by deleting line 8 on page 11 through line 3 on page 13; and | 8 | | on page 15, line 6, by replacing "or" with " or "; and | 9 | | on page 15, line 8, after "subsection (3)", by inserting " ; or | 10 | | (iii) an external independent audit of the credit union's | 11 | | financial statements in accordance with subsection (5) "; and | 12 | | on page 17, line 4, after "Board", by inserting " , or the | 13 | | regulatory basis of accounting identified in subsection (5) "; | 14 | | and | 15 | | on page 17, line 15, after " losses ", by inserting " and | 16 | | complies with the Department's rule addressing loan loss | 17 | | accounting procedures in 38 Ill. Adm. Code 190.70 "; and | 18 | | on page 28, by replacing lines 1 through 7 with the following: | 19 | | " (15)(A) In shares, stocks, or member units of | 20 | | financial technology companies in the total amount not |
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| 1 | | exceeding 2.5% of the net worth of the credit union, so | 2 | | long as: | 3 | | (i) the credit union would remain well capitalized | 4 | | as defined by 12 CFR 702.102 if the credit union | 5 | | reduced its net worth by the full investment amount at | 6 | | the time the investment is made or at any point during | 7 | | the time the investment is held by the credit union; | 8 | | (ii) the credit union and the financial technology | 9 | | company are operated in a manner that demonstrates to | 10 | | the public the separate corporate existence of the | 11 | | credit union and financial technology company; and | 12 | | (iii) the credit union has received a composite | 13 | | rating of 1 or 2 under the CAMELS supervisory rating | 14 | | system. | 15 | | (B) The investment limit in subparagraph (A) of this | 16 | | paragraph (15) is increased to 5% of the net worth of the | 17 | | credit union, if it has received a management rating of 1 | 18 | | under the CAMELS supervisory rating system at the time a | 19 | | specific investment is made and at all times during the | 20 | | term of the investment. A credit union that satisfies the | 21 | | criteria in subparagraph (A) of this paragraph (15) and | 22 | | this subparagraph may request approval from the Secretary | 23 | | for an exception to the 5% limit up to a limit of 10% of | 24 | | the net worth of the credit union, subject to such safety | 25 | | and soundness standards, limitations, and qualifications | 26 | | as the Department may establish by rule or guidance from |
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| 1 | | time to time. The request shall be in writing and | 2 | | substantiate the need for the higher limit, describe the | 3 | | credit union's record of investment activity, and include | 4 | | financial statements reflecting a sound fiscal history. | 5 | | (C) Before investing in a financial technology | 6 | | company, the credit union shall obtain a written legal | 7 | | opinion as to whether the financial technology company is | 8 | | established in a manner that will limit potential exposure | 9 | | of the credit union to no more than the loss of funds | 10 | | invested in the financial technology company and the legal | 11 | | opinion shall: | 12 | | (i) address factors that have led courts to | 13 | | "pierce the corporate veil", such as inadequate | 14 | | capitalization, lack of separate corporate identity, | 15 | | common boards of directors and employees, control of | 16 | | one entity over another, and lack of separate books | 17 | | and records; and | 18 | | (ii) be provided by independent legal counsel of | 19 | | the credit union. | 20 | | (D) Before investing in the financial technology | 21 | | company, the credit union shall enter into a written | 22 | | investment agreement with the financial technology company | 23 | | and the agreement shall contain the following clauses: | 24 | | (i) the financial technology company will: (I) | 25 | | provide the Department with access to the books and | 26 | | records of the financial technology company relating |
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| 1 | | to the investment made by the credit union, with the | 2 | | costs of examining those records borne by the credit | 3 | | union in accordance with the per diem rate established | 4 | | by the Department by rule; (II) follow generally | 5 | | accepted accounting principles; and (III) provide the | 6 | | credit union with its financial statements on at least | 7 | | a quarterly basis and certified public accountant | 8 | | audited financial statements on an annual basis; and | 9 | | (ii) the financial technology company and credit | 10 | | union agree to terminate their contractual | 11 | | relationship: (I) upon 90 days' written notice to the | 12 | | parties by the Secretary that the safety and soundness | 13 | | of the credit union is threatened pursuant to the | 14 | | Department's cease and desist and suspension authority | 15 | | in Sections 8 and 61; (II) upon 30 days' written notice | 16 | | to the parties if the credit union's net worth ratio | 17 | | falls below the level that classifies it as | 18 | | well-capitalized as defined by 12 CFR 702.102; and | 19 | | (III) immediately upon the parties' receipt of written | 20 | | notice from the Secretary when the Secretary | 21 | | reasonably concludes, based upon specific facts set | 22 | | forth in the notice to the parties, that the credit | 23 | | union will suffer immediate, substantial, and | 24 | | irreparable injury or loss if it remains a party to the | 25 | | investment agreement. | 26 | | (E) The termination of the investment agreement |
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| 1 | | between the financial technology company and credit union | 2 | | shall in no way operate to relieve the financial | 3 | | technology company from repaying the investment or other | 4 | | obligation due and owing the credit union at the time of | 5 | | termination. | 6 | | (F) Any financial technology company in which a credit | 7 | | union invests pursuant to this paragraph (15) that | 8 | | directly or indirectly originates, purchases, facilitates, | 9 | | brokers, or services loans to consumers in Illinois shall | 10 | | not charge an interest rate that exceeds the applicable | 11 | | maximum rate established by the Board of the National | 12 | | Credit Union Administration pursuant to 12 CFR | 13 | | 701.21(c)(7)(iii)-(iv). The maximum interest rate | 14 | | described in this subparagraph that may be charged by a | 15 | | financial technology company applies to all consumer loans | 16 | | and consumer credit products. "; and | 17 | | on page 30, immediately below line 2, by inserting the | 18 | | following: | 19 | | "Section 99. Effective date. This Act takes effect upon | 20 | | becoming law, except that Section 16.5 of the Illinois Credit | 21 | | Union Act takes effect January 1, 2023.".
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