Repeal of Responsible Property Transfer Act

PA 92-0299 (HB 3217) repeals a statutory disclosure process applicable to financial institutions and others involved in reporting existing environmental liabilities during a real estate transaction.   Other federal and state environmental laws, however, cover the subject matter of the repealed Act.  Effective August 9, 2001.

Bank basic lending limit

  PA 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.

Corporate Fiduciary Act & Receivership Account amendments

PA 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.

The Corporate 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.

Use of bank names & bank directors’ reliance

PA 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. 

The 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.

Amends Deposit of State Moneys Act relating to home loans

PA 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.

OBRE omnibus bill making changes in financial institutions laws

PA 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. 

The Illinois 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. 

The Illinois 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.

The Corporate 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.