2001 Legislative Update
The following is a summary
of banking related legislation enacted by the Illinois General Assembly
and subsequently approved by Governor Ryan. This summary is provided for
your general reference. For specific guidance concerning the applicability
or effect of legislation on your institution, you should seek the advice
of your legal counsel.
92-0020 (HB 2376) amends the Illinois
Banking Act to provide that all earnings received from the investment
of funds in the Bank and Trust Company Fund (administered by OBRE) shall
be deposited in that Fund and used for the same purposes as fees deposited
in that Fund. Effective July 1, 2001.
92-0097 (SB 1048) amends the Probate
Act of 1975 to provide that the sale of a deceased person's
real estate from his or her estate may be conducted by means of the
Internet or any other electronic medium as approved by the court.
Effective July 18, 2001.
92-0180 (HB 2540) is an OBRE initiative creating the Real Estate
Appraiser Licensing Act of 2002.
It replaces the current Act and modifies licensing requirements with
respect to experience requirements, temporary practice permits, complaint
investigation and resolution, and other areas to bring Illinois law
into compliance with federal appraisal licensing standards under provisions
of Title XI of the federal Financial
Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). A new associate real estate appraiser classification
is created for entry-level appraisers and the current state licensed
real estate appraiser license is phased out between July 1, 2002 and
September 30, 2003. Effective July 1, 2002.
92-0285 (HB1051) amends the Illinois
Trust and Payable on Death Accounts Act to provide that payable
on death accounts may have multiple owners. It is intended to
clarify that a payable on death account may be opened or maintained
as a joint account by two or more account holders. Effective January
92-0336 (HB 1089) amends Section 32 of the Illinois
Banking Act to increase the basic lending limit from 20% to 25%
of the unimpaired capital and unimpaired surplus of a bank. PA 92-0336
does not change the guaranty limit in Section 32 (5). Effective
August 10, 2001.
92-0485 (SB 48) is an OBRE initiative to increase the maximum
amount from $350,000 to $4,000,000 to be held in the Corporate Fiduciary
Receivership Account in the Bank and Trust Company Fund. This amount
will be raised over a ten-year period through OBRE rulemaking to increase
the Account formula assessed to trust departments of financial institutions
and trust companies. The Commissioner may also require a trust company
to pledge to the Commissioner securities or a surety bond, in an amount
up to $1,000,000, solely for the purpose of covering costs associated
with any receivership of that trust company.
Fiduciary Act is further amended by PA 92-0485 to make changes
to the management structure and business affairs of a trust company.
It specifically requires the election of at least 5 directors, the holding
of regular monthly board meetings, the keeping of suitable books and records
of all transactions, and that at least once per calendar year an audit,
as prescribed by the Commissioner, be performed by an independent licensed
public accountant. Language is added penalizing persons who make
false statements on applications to the Commissioner and contains other
provisions. Effective August 23, 2001.
92-0476 (HB 1030) makes two changes to the Illinois
Banking Act. First, it prohibits the use of a name of an
existing bank or a name deceptively similar to that of an existing bank
when soliciting customers. Second, it provides that in discharging
their duties, bank directors are entitled to rely on advice and information
prepared or presented by bank officers, employees, legal counsel, accountants,
consultants, or certain board committees. A director may only rely
on such information if the director believes the person is reliable and
competent in the matter presented or the matter is within the person’s
professional or expert competence and the director’s reliance must placed
in good faith, after reasonable inquiry if the need is apparent.
Act is intended to eliminate deceptive practices relating to solicitations
for mortgage refinancing, and to extend to Illinois bank directors added
legal protections. Effective August 23, 2001.
92-0482 (HB 2439) amends the Deposit
of State Moneys Act to provide that the State Treasurer may accept
a proposal from an eligible financial institution that provides for a
reduced rate of interest on deposits of State moneys if the institution
agrees to a plan, approved by the State Treasurer, to 1) make home loans
to Illinois citizens purchasing a home in Illinois in situations where
the institution would not offer the borrower a home loan under the institution’s
prevailing credit standards without this incentive and 2) refrain from
commencing or pursuing foreclosure proceedings with respect to home loans
of Illinois citizens who have failed to make payments on the home loan
as a result of a temporary layoff or disability, but who have resumed
by making at least 2 consecutive payments on the home loan, when the institution’s
prevailing policies would direct foreclosure proceedings be commenced
without this incentive. This is an initiative of the State Treasurer’s
Office. Effective August 23, 2001.
92-0483 (HB 2538) is an OBRE initiative amending various financial
institutions laws. PA 92-0483 makes changes to clarify, update,
and enhance the Commissioner’s powers to regulate banks and trust companies
and other financial institutions under OBRE authority. The Office
of Banks and Real Estate Act is amended to authorize the Commissioner
to issue conditional approvals, to issue subpoenas, compel attendance
and require records production in investigating unlicensed activity, and
to seek court injunctions through the Attorney General to enforce provisions
of the Acts the Commissioner administers.
Banking Act is amended to authorize the Commissioner to issue
conditional approvals in carrying out his powers and duties under the
Act. This includes authority for the Commissioner to issue conditional
permits for banks to organize, to condition approvals for changes in control,
and to condition approvals under Section 48 of the Act. PA 92-0483
further clarifies the Commissioner’s authority under Section 48 of the
Act to issue orders against persons involved in unsafe and unsound practices
and to enter into agreements with banks establishing corrective action
procedures. The Commissioner’s removal powers are extended to include
the officers, employees, agents, and directors of a subsidiary or holding
company of a bank and a provision is added, consistent with the Business
Corporations Act, that directors may be removed without cause
as well as with cause. A provision is added that in cases when the
Commissioner has taken possession and control of a bank or banking office,
parties to a “qualified financial contract” that have a perfected security
interest in collateral may retain such collateral and upon repudiation
or termination of the contract apply the collateral in satisfaction of
the claims. The original legislation was amended during the 2001
Session of the Illinois General Assembly to authorize banks to disclose
financial records or information as necessary to protect against fraud,
carry out a transaction authorized by a customer, or in connection with
servicing a customer’s account. The sale of customer records or
information without the consent of the customer is specifically prohibited.
Banking Act is amended to redefine community as encompassing the area
served by the bank and is no longer restricted to geographic boundaries
of units of local government. Limited liability companies are added
to the definitions of “company”, “trust company”, and “person”.
The prohibition on a bank owning a travel agency is deleted from the Act.
The board of directors of a bank in organization and applicants for a
change in control must now report any material changes in operating plans
or circumstances to the Commissioner. An interim bank may now be
organized to be the resulting bank in a merger with an existing national
bank or insured savings association. PA 92-0483 contains numerous
other changes to the Illinois Banking Act.
Fiduciary Act is amended to remove the prohibition on foreign
corporations conducting corporate fiduciary activities, if Illinois corporate
fiduciaries are allowed to conduct activities in that foreign corporation’s
home state. The Illinois
Bank Holding Company Act of 1957 is amended to authorize the Commissioner
to remove any officer, director, employee, or agent of a bank holding
company, subsidiary, or affiliate on the same grounds as the removal under
the Illinois Banking Act. The Banking
Emergencies Act is amended to include computer failures in the
definition of “emergency” and to clarify that the Commissioner may
issue area wide or statewide proclamations. The Foreign
Banking Office Act is amended to strengthen the Commissioner’s
powers in cases of liquidation by authorizing the Commissioner to prescribe
the pledge of assets, to use assets pledged to cover liquidation costs
incurred by OBRE, and to give priority to in-state creditors and secondary
priority to other U.S. creditors before returning assets to a foreign
bank. Effective August 23, 2001.