Illinois Department of Financial & Professional Regulation Illinois Department of Financial & Professional Regulation
Bryan A. Schneider, Secretary  
Bruce Rauner, Governor
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2003 Legislative Update

The following is a summary of significant banking related legislation enacted by the Illinois General Assembly during its regular session and subsequently approved by Governor Blagojevich. This summary also includes significant new legislation enacted during the recent legislative veto session. Your attention is specifically directed to new legislation related to the purchase of stock of the Federal Home Loan Bank by state-chartered banks. On December 15, 2003 the Governor signed into law measures that now allow a state-chartered bank the authority to purchase Federal Home Loan Bank stock. The amendment to Section 34 of the Illinois Banking Act is effective immediately.

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.

Employee Equal Pay

P.A. 93-0006 (S.B. 2) creates the new Equal Pay Act of 2003. The major provision of this Public Act establishes a prohibition against paying unequal wages to employees of different genders if similar work, skills, responsibilities and working conditions are involved. This equal pay provision applies all Illinois employer having at least four employees. The Act does provide for exceptions to the general “equal pay” rule if the employer has an established merit, seniority, quality or quantity production pay scheme in place. Different geographical regions for similar jobs may also warrant pay differentials. In those instances where unequal pay does not qualify for a designated exception, the employer is prohibited from attempting to correct pay differentials by reducing the wages of the higher paid employee. The Act also requires Employers to maintain employee records for a period of at least three years. This new Act will become effective on January 1, 2004.

Point of Sale Terminal Disclosure

P.A. 93-136 (H.B.1150) amends Section 50 of the Electronic Fund Transfer Act by deleting language that previously exempted point of sale terminals from disclosure, access and advertising requirements. Now, point of sale terminals must comply with all surcharge disclosure requirements, access requirements and limitations on proprietary advertising previously applied to ATM terminal providers. The amendatory language will become effective on January 1, 2004.

Identity Theft

P.A. 93-195 (H.B. 2188) amends the Criminal Code of 1961 by creating a private right to initiate a law enforcement investigation related to identity theft. The victim of identity theft is also granted the right to seek a judicial determination of innocence when another party has been arrested or convicted of a criminal offense under the victim’s name.

P.A. 93-195 also amends the Consumer Fraud and Deceptive Business Practices Act to require that credit card issuers verify the accuracy of application information prior to the issuance of a credit card. In addition, if credit providers use a consumer credit report and receive information that a person applying for credit has been the victim of identity theft, that credit provider is prohibited from extending credit unless they have taken reasonable steps to verify the identity of the applicant. These new verification provisions do not apply to an existing open-end credit plan. The new identity protection measures take effect on January 1, 2004.

Grain Insurance Fund Coverage/Lender Premium Payments

P.A. 93-225(H.B. 1458) establishes new grain industry regulations, including new provisions requiring lenders who provide credit to Grain Code licensees to pay premiums to the Illinois Grain Insurance Fund in order to gain potential insurance protection. The effective date for these new measures was July 21, 2003.

Credit-Debit Card Receipt Truncation

P.A. 93-231 (H.B. 259) amends the Consumer Fraud and Deceptive Practices Act and now generally requires that all credit and debit card receipts be printed or produced in a manner that identifies the account only by the last four digits assigned to the particular account. In addition, the receipt must not contain the expiration date of the card. An exception is provided if the only means of producing the card receipt is by handwriting or by imprinting the actual card. These new provisions become effective on January 1, 2005.

Deposit of State-Public Money/Community Commitment Consideration

P.A. 93-251 (H.B. 277) adds new Section 16.3 to the Deposit of State Moneys Act and new Section 8 to the Public Funds Investment Act. The new statutory language provides the State Treasurer and any public agency the authority to consider a financial institution’s commitment to the local community when making a decision whether to deposit state or public funds. The Treasurer or Public Funds Administrator may now consider publicly available information, including historical financial institution CRA ratings. In addition, consideration may be given to any change in ownership, management or business policies and practices that may affect the financial institution’s level of community commitment. The statute specifically provides that neither the State Treasurer nor any public agency shall be authorized to conduct an examination or investigation of the financial institution and they shall only consider publicly available information. This new provision will become effective on January 1, 2004.

ATM Reverse PIN Alarm System

P.A. 93-273 (S.B. 562) amends the Electronic Fund Transfer Act to allow terminal operators discretionary authority to implement a “reverse PIN alarm system”. In case of an emergency or an instance of a forced attempt to withdraw funds, by entering the customer’s PIN in reverse order. This amendment authorizing the discretionary system is effective on January 1, 2004.

Revolving Credit Disclosure and Notice

P.A. 93-287 (S.B. 1116) amends the Illinois Financial Services Development Act and requires additional disclosure and notice to consumers if a change in a borrowers credit standing will adversely affect the interest or other charges due. The disclosure must also provide the borrower an opportunity to avoid the changes to the revolving credit plan by paying off the existing balance. These new disclosure and notice requirements become effective on January 1, 2004.

Continuing Efforts to Prevent Elder Abuse

P.A. 93-301 (H.B. 87) makes amendments to the Elder Abuse and Neglect Act, the Illinois Criminal Code and the Probate Act. The Elder Abuse and Neglect Act amendment authorizes the Department of Aging to seek assistance from financial institutions in circulating information regarding financial exploitation, abuse and fraud. This assistance can include seeking these institutions to place signs and other written materials on the financial institution premises.

The Probate Act has also been amended to prevent a beneficiary who has been convicted of elder abuse, exploitation or neglect from receiving property through the probate process. Financial institutions may be subject to civil liability if they transfer property to an otherwise disqualified beneficiary after they have received notice of a conviction and disqualification. These new amendments become effective on January 1, 2004.

Bad Check Diversion Program

P.A. 93-394 (S.B. 211) amends the Criminal Code of 1961 and allows a county States Attorney the discretion to refer a person charged with the offense of deceptive practices to a diversion/education program instead of prosecuting that offense. The States Attorney is also granted discretion to condition the diversion upon evidence of complete restitution and payment of expense incurred by a victim who received a dishonored check. This amendment to the Criminal Code became effective on July 29, 2003.

Enhanced Identity Theft Criminal Penalties

P.A. 93-401 (S.B. 242) enhances the criminal penalties imposed upon parties who engage in or facilitate identity theft. New provisions to the Criminal Code of 1961 now impose criminal sanctions upon persons who obtain, sell or manufacture personal identification information or documents without lawful authority. The new provisions of the Criminal Code took effect on July 31, 2003.

Illinois Financial Crimes Law

P.A. 93-440 (S.B. 1053) creates a specific section of the Criminal Code of 1961 devoted to new criminal offenses and penalties for crimes against a financial institution. Although most of the offenses were already federal offenses, now the Illinois Attorney General and state prosecutors have specific authority to pursue a criminal investigation and prosecution. New state criminal offenses include misappropriation of financial institution property, loan fraud, financial institution robbery, conspiracy to commit a financial crime and concealment of collateral. Penalties for the new violations of the Illinois Criminal Code range from class A misdemeanors through a class one felony punishable by a term of imprisonment of up to fifteen years. The changes to the Criminal Code became effective on July 5, 2003.

Disclosure of Public Funds Investments

P.A. 93-499 (H.B. 3142) establishes new disclosure requirements for all state agencies to provide online information related to the amount and average daily balance of public funds invested and the yield of all invested funds. In addition, each state agency must provide a listing of all approved depository institutions, commercial paper issuers and broker-dealers approved to transact business with the particular agency. The online disclosure must be updated on a continuing basis on or before the fifteenth day of each month. The new disclosure requirements become effective on January 1, 2004.


Financial Omnibus Bill

P.A. 93-561 (S.B. 1784) creates the new High Risk Home Loan Act and amends several previously existing financial related statutes. Each of the following provisions became effective on January 1, 2004.

  • High Risk Home Loans
    The new statutory provisions are intended to provide additional protections to home loan borrowers and establish guidelines for lenders engaged in high risk lending. Now residential mortgage licensees must meet a greater minimum net worth standard in order to insure their continued financial viability and credibility. High-risk loan borrowers now have the right to pursue civil remedies against both the originator and secondary market holder of the loans.

    In addition, the new statutory provisions allow the Illinois Attorney General to pursue civil actions against unscrupulous lenders based upon the Consumer Fraud and Deceptive Practices Act.

  • Public Deposits/Eligible Collateral
    P.A. 93-561 also amends the Deposit of State Moneys Act to allow the State Treasurer to accept alternative collateral for deposits that exceed federal insurance coverage, including letters of credit issued by the Federal Home Loan Bank and loans covered by a state guarantee under the Illinois Farm Development Act. In addition, the State Treasurer may accept certificates of deposit issued by a financial institution having assets of $15,000,000 or more.

Similar changes have been made to the Public Funds Deposit Act to allow any treasurer or custodian of public funds to make deposits secured by the same collateral eligible for acceptance by the state Treasurer under the Deposit of State Moneys Act.

  • Limited Liability Company/Banks
    P.A. 93-561 expands the types of business structures that may organize, merge or convert to a state charter. Both the Illinois Banking Act and the Savings Bank Act have been significantly amended to allow Limited liability Companies to establish, merge with or otherwise operate as a state chartered bank or savings bank.

ATM Link Card Surcharge Prohibition

P.A. 93-583 (H.B. 467) introduced new measures that restrict surcharges on Illinois Public Aid Act transactions. These new measures prohibit any person operating an electronic funds transfer terminal from imposing a usage surcharge when a transaction is initiated by means of a Link Card or other access devise issued by a government agency to obtain benefits or financial aid under the Illinois Public Aid Act. The amendment to the Electronic Funds Transfer Act will become effective on January 1, 2004.

Illinois Minimum Wage

Public Act 93-581 (S.B. 600) amends the Illinois Minimum wage Law to increase the minimum wage for employees at least 18 years old to $5.50 per hour effect January 1 2004. An additional increase to $6.50 per hour for eligible employees will take effect on January 1 2005.

New Exception to Loan and Investment Limit

Public Act 93-620 (S. B. 771) amends section 34 of the Illinois Banking Act and establishes a new exception to general loan and investment limits for state–chartered banks. Effective December 15, 2003, these institutions are specifically authorized to purchase and hold as an investment stock issued by the Federal Home Loan Bank. The enactment of this new authority supercedes and rescinds the more limited authority previously granted to state-chartered banks under the “National Wild Card” provision of the Illinois Banking Act.

Copies of the Public Acts indicated in the memorandum are available from the Agency's web site or by contacting our office.

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