Illinois League key advocate in passage of landmark state regulatory exam consistency legislation

HB 5342 overwhelmingly passes both chambers
NAPERVILLE, IL (June 4, 2014) 
— Last week, the Illinois General Assembly (IGA) passed HB 5342, a measure to help ensure the Illinois Department of Financial and Professional Regulation (IDFPR) maintains a consistent and fair examination protocol for the benefit of all Illinois state chartered credit unions.

The goal of the legislation is to ensure that all state regulatory examinations are conducted in a procedurally and substantively consistent manner, and to provide clarity, flexibility and authority in a number of operational areas.  The Illinois Credit Union League (ICUL) worked closely with IDFPR on a collaborative basis to draft rulemaking and guidelines necessary to implement the statutory directive relating to examination consistency.  Key elements of HB 5342 include:

·         Charitable Donation Accounts: Authorizes Illinois credit unions to establish charitable donation accounts to buttress credit union charitable giving efforts in the current low yield environment.  These accounts, which may include otherwise impermissible investments, will give a credit union the opportunity to achieve a higher yield provided that at least 51 percent of the return from the account is donated to a recognized charity.

·         Services to other Credit Unions: Authorizes Illinois credit unions, by written agreement, to share daily operational services, correspondent services and fixed assets.  This measure will enable many credit unions to achieve improved economies of scale in order to operate more efficiently.

·         Loans: Authorizes Illinois credit unions to forego the burden of procuring a new appraisal in connection with a mortgage loan renewal, refinancing or restructuring, when no new money is advanced (other than closing costs).

·         Duties of Directors: Provides that Illinois credit union board members must have a basic understanding of the credit union’s financial statements, services and products offered to the membership, operational risks and internal control structures.  Directors that do not possess the requisite financial skills may receive training from any source and through any medium.  There are no minimum hours of training required and it may be addressed through on the job training.  IDFPR will evaluate compliance not by scrutiny of individual director financial skills, but rather by confirming whether the credit union has a director training policy in place.

·         Duties of Supervisory Committee: Provides that Illinois credit union supervisory committee members must receive annual training with respect to their statutory duties. Training may be received from any source and through any medium.  There are no minimum hours of training required and it may be addressed through on the job training.

HB 5342, which was sponsored by longtime credit union supporters Illinois Representative and Deputy Majority Leader Lou Lang (D-16, Skokie), and Illinois Senator Dave Koehler (D-46, Peoria), overwhelmingly passed both chambers. The bill passed in the Illinois House by a vote of 109-0-1 on March 21, 2014, and then in the Illinois Senate 56-0 on May 28, 2014. The vote totals represent tremendous support for regulatory examination consistency by the entire IGA.

“This measure will help ensure we maintain a consistent exam protocol in Illinois for the benefit of all parties concerned,” said Stephen Olson, ICUL executive vice president and general counsel. “There will now be standards that state chartered credit unions can reference and rely upon with respect to the entire regulatory examination process.”

“This is exciting news for Illinois state chartered credit unions,” said Sean Hession, ICUL president/ CEO. “The contents of the bill, as well as the rules and guidelines to promulgate it, are cause for celebration and will serve as a model across the country for state and federal regulators.”

Note: The Illinois Credit Union League (ICUL) is the primary trade association for credit unions in Illinois and provides its members with compliance and other pertinent operating information, legislative advocacy and educational development opportunities.  Membership is open to any credit union operating in accordance with the Illinois Credit Union Act or the Federal Credit Union Act.  There are 336 credit unions in Illinois serving almost 3 million members.

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