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1999 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.

Public Act 91-16 (House Bill 1281) Transfers the administration of the Unclaimed Property Act from the Illinois Department of Financial Institutions to the Office of the State Treasurer. Effective July 1, 1999.

Public Act 91-16 amended various acts to transfer the responsibility for the administration of the Unclaimed Property Act from the Illinois Department of Financial Institutions to the Office of the State Treasurer. This bill gave the Office of Banks and Real Estate the responsibility of conducting unclaimed property examinations of state chartered banks, savings banks, and trust companies if the State Treasurer requests such an examination upon a reasonable belief that the bank, savings bank or trust company has failed to report unclaimed property. Unless the State Treasurer requests an accelerated examination, the Commissioner shall conduct the unclaimed property examination in conjunction with the next regularly scheduled examination of the institution. The State Treasurer will pay the Commissioner's office for the costs of the unclaimed property examination.

Public Act 91-97 (Senate Bill 378) Amends various Acts concerning savings and loan associations and savings banks. Effective July 9, 1999.

Public Act 91-97 made a number of changes with respect to savings and loan associations and savings banks. It amended the Illinois Savings and Loan Act of 1985 to allow that savings and loan associations may act as a custodian or trustee. In addition, it gave the Commissioner the power to defer taking control of a savings and loan association if that association is resolving its problems in accordance with the direction of its deposit insurance corporation. This legislation also amended the Savings Bank Act to delete the requirement that the Commissioner approve the location and operation of electronic fund transfer terminals. In addition, it authorized alternative voting arrangements for mutual savings banks, provided waiver of notice provisions, and authorized a savings bank to convert to any type of depository institution. Finally, it amended the Corporate Fiduciary Act to incorporate references to savings banks throughout the Act.

Public Act 91-148 (Senate Bill 461) Amends the Illinois Savings and Loan Act of 1985. Effective July 16, 1999.

Public Act 91-148 amended the Illinois Savings and Loan Act of 1985 to delete provisions exempting a savings and loan association from garnishment proceedings in connection with capital accounts.

Public Act 91-159 (Senate Bill 795) Amends the Title Insurance Act. Effective January 1, 2000.

Public Act 91-159 amended the Title Insurance Act to define "title insurance" and "title insurance business". This legislation also gives a title insurance company or a title insurance agent the authority to act as an escrow agent in certain instances. It does require specific authorization from the Director of Insurance prior to a title insurance agent acting as an escrow agent.

Public Act 91-201 (Senate Bill 447) amends the Illinois Banking Act concerning confidentiality of banking reports. Effective January 1, 2000.

Public Act 91-201 amended the Illinois Banking Act to expand the confidentiality protections of bank examinations and related information. This legislation requires a person upon whom a demand for production of the confidential information is made, whether by subpoena, order or other judicial order or process, to notify the Commissioner of Banks and Real Estate of the demand for production of the information. The Commissioner must then determine, within 15 days, whether to approve the disclosure of the confidential supervisory information.

Public Act 91-211 (Senate Bill 1026) Amends the Public Funds Deposit Act concerning the deposit of public funds in a savings bank. Effective July 20, 1999.

Public Act 91-211 amended the Public Funds Deposit Act to permit a treasurer or custodian of public funds to deposit those funds into a savings bank. In addition, if the treasurer or custodian receives securities from the depository institution in an amount by which the funds exceed the federally insured amount, allows him or her to enter into an agreement with a savings bank, a federally insured financial institution or trust company, or a federal agency for the deposit of such securities.

Public Act 91-270 (Senate Bill 481) Amends the Consumer Fraud and Deceptive Business Practices Act concerning holders of retail installment contracts. Effective January 1, 2000.

Public Act 91-270 amended the Consumer Fraud and Deceptive Business Practices Act to afford holders of retail installment contracts certain rights and liability protections that are afforded to new and used automobile dealers.

Public Act 91-316 (House Bill 1742) Amends the Uniform Disposition of Unclaimed Property Act concerning property held by financial institutions. Effective July 29, 1999.

Public Act 91-316 amended the Uniform Disposition of Unclaimed Property Act to provide that the presumption of abandonment does not apply to charges that are lawfully withheld in connection with a money order issued by a currency exchange.

Public Act 91-322 (House Bill 2019) Amends the Illinois Banking Act concerning changing a bank's name or its main premises and concerning liability of directors. Effective January 1, 2000.

Public Act 91-322 amended the Illinois Banking Act. This legislation requires that a bank give the Commissioner of Banks and Real Estate 30 days written notice prior to changing its name. In addition, it requires written application to the Commissioner, rather than a charter amendment, prior to changing the bank's main banking premises. If the Commissioner has not acted on the application within 30 days after its receipt, the application is deemed accepted. This legislation also eliminates the requirement that the bank obtain a charter amendment to limit the personal liability of directors.

Public Act 91-324 (House Bill 2047) Amends the Public Funds Investment Act concerning deposit insurance. Effective January 1, 2000.

Public Act 91-324 amended the Public Funds Investment Act to provide that when an agency deposits public funds into a financial institution, the agency may require that any amounts deposited that exceed the federally insured amount be collateralized by loans covered by a State Guaranty under the Illinois Farm Development Act.

Public Act 91-330 (House Bill2204) Creates the Banking on Illinois Act to encourage and provide a favorable environment in Illinois for the chartering and operating of banks that locate and maintain main banking offices in this State. The main provisions of PA 91-330 include the following changes to the Illinois Banking Act:

  • Section 5(25) was amended to grant Illinois state-chartered banks parity regarding products and services offered by a state-chartered bank of any other state in the country. These provisions specifically exclude the expansion of insurance powers, real estate brokerage, and branching. To the extent that a state bank proposes to offer a product or service that may not be authorized for a national bank to perform, the state bank should consult with the Federal Deposit Insurance Corporation, (the "FDIC") to determine whether FDIC approval is required.

  • Section 5(3) was amended to allow Illinois banks the ability to rely on the Business Corporation Act when the Illinois Banking Act is silent as to a matter of corporate governance.

  • Section 5(e) was amended to permit banks to set account service charges and other charges not expressly limited or prescribed by law according to prudent business judgment and safe and sound operating standards

  • Section 48.1(a)(6) was amended to permit banks to share customer information with third parties conducting due diligence in connection with the sale or purchase of the bank.

  • Section 48.1(c) was amended to protect information obtained from financial records, in addition to the records themselves, from disclosure unless the disclosure is expressly required by law. This will help ensure that banks avoid liability when they are maintaining the confidentiality of their customer's information.

Public Act 91-411 (House Bill 429) Amends the Motor Vehicle Retail Installment Sales Act. Effective August 6, 1999.

Public Act 91-411 amended the Motor Vehicle Retail Installment Sales Act to change the definition of "amount financed" to include amounts actually paid or to be paid by the seller under an agreement with the buyer to discharge a security interest, lien interest or lease interest on the property traded in.

Public Act 91-433 (House Bill 1286) Creates the Land Trust Fiduciary Duties Act. Effective August 6, 1999.

Public Act 91-433 created the Land Trust Fiduciary Duties Act. This legislation is declaratory of existing law and was adopted to clarify that holders of the power of direction are accountable to the holders of the beneficial interest in land trusts.

Public Act 91-452 (House Bill 2494) Amends the Illinois Banking Act concerning the reservation of a corporate name and the residency of directors. Effective January 1, 2000.

Public Act 91-452 amended the Illinois Banking Act. It permits an applicant seeking to charter an Illinois state-chartered bank to reserve its corporate name with the Commissioner of Banks and Real Estate. In addition, this legislation removes the residency requirement for directors of state chartered banks, creating an incentive for Illinois state chartered banks engaging or planning to engage in interstate banking to remain an Illinois state chartered bank.

Public Act 91-492 (House Bill 943) Amends the Home Equity Assurance Act by authorizing the creation of a Low Interest Home Improvement Loan Program. Effective January 1, 2000.

Public Act 91-492 amended the Home Equity Assurance Act. With referendum approval, permits the governing commission of the Home Equity Program to establish a Low Interest Home Improvement Loan Program in accordance with and subject to procedures established by a financial institution. The loans and loan guarantees, if applicable, may not reduce the balance of the guarantee fund to less than $3,000,000.

Public Act 91-517 (Senate Bill 109) Amends the Criminal Code to create the Financial Identity Theft and Asset Forfeiture Law. Effective August 13, 1999.

Public Act 91-517 creates the Financial Identity Theft and Asset Forfeiture Law. The Law states that a person commits an offense of the Law when they knowingly use the personal identifying information of another in order to obtain credit, money, goods or services in the name of the other person.

Public Act 91-607 (Senate Bill 1014) Amends the State Treasurer Act to create the College Savings Pool. Effective January 1, 2000.

Public Act 91-607 amended the State Treasurer Act. This legislation permits the State Treasurer, beginning March 1, 2000, to establish and administer a college savings pool in which participants will deposit funds for tuition, fees, room and board, and other expenses associated with higher education. Participants in the college savings pool will deposit funds in a participating financial institution, which will then transfer the funds in accordance with the directions of the State Treasurer. Participating financial institutions may impose a fee, initially not to exceed $30, for the processing of the applications. The State Treasurer will then invest the funds. The State Treasurer shall invest a percentage of each deposit with the participating financial institution that initially processed the deposit, with such percentage depending on the age of the beneficiary. Deposits shall be limited to amounts set by the State Treasurer. Penalties may be imposed for improper usage of the funds.

Public Act 91-645 (Senate Bill 890) Creates the Illinois Financial Institutions Year 2000 Safety and Soundness Act. Effective August 20, 1999.

Public Act 91-645 created the Illinois Financial Institutions Year 2000 Safety and Soundness Act. This legislation provides protection for consumers and financial institutions in connection with complications that may occur as the result of the Year 2000 date change.

With respect to financial institutions, the legislation prohibits non-customers from directly suing an institution in connection with a Y2K claim, requires customers to provide an institution with prelitigation notice and a period for remediation, and shields employees, officers, and directors of the institution from liability in the absence of fraud.

With respect to consumers, the legislation requires a financial institution to stay any collection actions, except for collection on a residential mortgage, and late fees for 30 days if the consumer timely notifies the institution and provides verification of the Y2K failure that is the cause of the nonpayment or late payment of a debt. With respect to collection actions on residential mortgages, protects the consumer from a foreclosure action until the later of four weeks after January 1, 2000 or four weeks after notification by the consumer of a Y2K failure, but in no case may a notification be made after March 14, 2000.

Senate Resolution 121

Senate Resolution 121 directs the Commissioner to annually report to the General Assembly until 2006 on the progress and implementation of the Banking on Illinois Act, focusing on the effect that the Act has had on the economic, financial, and employment climate of the State and recommending any changes that appear to be wise, prudent, and advisable.

Senate Resolution 134

Senate Resolution 134 directs the Commissioner to conduct a study of safety and security issues surrounding the use of automated teller machines. The study is to focus on different proposals for increased ATM security measures, including a reverse PIN warning system.

 
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