SB3021 93RD GENERAL ASSEMBLY

LRB093 20607 SAS 46437 b

93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
SB3021

Introduced 2/6/2004, by Kimberly A. Lightford

SYNOPSIS AS INTRODUCED:

205 ILCS 305/13	from Ch. 17, par. 4414
205 ILCS 305/16.1 new
205 ILCS 305/23	from Ch. 17, par. 4424
205 ILCS 305/26	from Ch. 17, par. 4427
205 ILCS 305/30	from Ch. 17, par. 4431

Amends the Illinois Credit Union Act. Expands a credit union's general powers to sell to persons eligible for membership, negotiable checks, money orders, and similar money transfer instruments, cash checks and money orders, and receive electronic fund transfers for a fee. Increases access to credit union service to the economically disadvantaged. Provides that individuals earning a stated amount or whose annual household income falls at or below a stated amount may be admitted to membership in a credit union. Requires credit unions desiring to serve the economically disadvantaged to have a written business plan documenting the fact that the area or persons meet certain criteria, identifying the credit and depository needs of the area or persons, identifying the services to be delivered, and describing the manner in which the services will be delivered. Makes changes concerning the reimbursement, titles, qualifications, suspension or removal of a credit union's board of directors and executive officers. Effective immediately.

A BILL FOR

AN ACT concerning financial regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Credit Union Act is amended by changing Sections 13, 23, 26, and 30 and by adding Section 16.1 as follows:

(205 ILCS 305/13) (from Ch. 17, par. 4414)

Sec. 13. General powers. A credit union may:

(1) Make contracts; sue and be sued; and adopt and use a common seal and alter the same;

(2) Acquire, lease (either as lessee or lessor), hold, pledge, mortgage, sell and dispose of real property, either in whole or in part, or any interest therein, as may be necessary or incidental to its present or future operations and needs, subject to such limitations as may be imposed thereon in rules and regulations promulgated by the Director; acquire, lease (either as lessee or lessor), hold, pledge, mortgage, sell and dispose of personal property, either in whole or in part, or any interest therein, as may be necessary or incidental to its present or future operations and needs;

(3) At the discretion of the Board of Directors, require the payment of an entrance fee or annual membership fee, or both, of any person admitted to membership;

(4) Receive savings from its members in the form of shares of various classes, or special purpose share accounts; act as custodian of its members' accounts; issue shares in trust as provided in this Act;

(5) Lend its funds to its members and otherwise as hereinafter provided;

(6) Borrow from any source in accordance with policy established by the Board of Directors to a maximum of 50% of capital, surplus and reserves;

(7) Discount and sell any obligations owed to the credit union;

(8) Honor requests for withdrawals or transfers of all or any part of member share accounts, and any classes thereof, in any manner approved by the credit union Board of Directors;

(9) Sell all or substantially all of its assets or purchase all or substantially all of the assets of another credit union, subject to the prior approval of the Director;

(10) Invest surplus funds as provided in this Act;

(11) Make deposits in banks, savings banks, savings and loan associations, trust companies; and invest in shares, classes of shares or share certificates of other credit unions;

(12) Assess charges and fees to members in accordance with board resolution;

(13) Hold membership in and pay dues to associations and organizations; to invest in shares, stocks or obligations of any credit union organization;

(14) Declare dividends and pay interest refunds to borrowers as provided in this Act;

(15) Collect, receive and disburse monies in connection with providing negotiable checks, money orders and other money-type instruments, and for such other purposes as may provide benefit or convenience to its members, and charge a reasonable fee for such services;

(16) Act as fiscal agent for and receive deposits from the federal government, this state or any agency or political subdivision thereof;

(17) Receive savings from nonmembers in the form of shares or share accounts in the case of credit unions serving predominantly low-income members. The term "low income members" shall mean those members who make less than 80% of the average for all wage earners as established by the Bureau of Labor Statistics or those members whose annual household income falls at or below 80% of the median household income for the nation as established by the Census Bureau. The term "predominantly" is defined as a simple majority;

(18) To Establish, maintain, and operate terminals as authorized by the Electronic Fund Transfer Act; and

(19) Subject to Article XLIV of the Illinois Insurance Code, to act as the agent for any fire, life, or other insurance company authorized by the State of Illinois, by soliciting and selling insurance and collecting premiums on policies issued by such company; and may receive for services so rendered such fees or commissions as may be agreed upon between the said credit union and the insurance company for which it may act as agent; provided, however, that no such credit union shall in any case assume or guarantee the payment of any premium on insurance policies issued through its agency by its principal; and provided further, that the credit union shall not guarantee the truth of any statement made by an assured in filing his application for insurance; and .

(20) Sell to any person eligible for membership, negotiable checks (including travelers checks), money orders, and similar money transfer instruments (including electronic fund transfers), cash checks and money orders, and receive electronic fund transfers for any person eligible for membership for a fee, on a limited basis for a period not to exceed 6 months, as a promotional activity to encourage the eligible person to join the credit union, in accordance with policy established by the Board of Directors.

(Source: P.A. 92-608, eff. 7-1-02; revised 1-20-03.)

(205 ILCS 305/16.1 new)

Sec. 16.1. Service to the economically disadvantaged.

(a) Persons who reside, work, worship, or attend school in investment areas as defined in the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4702) and identified by the U.S. Department of the Treasury may be admitted to membership in credit unions able to serve the areas by maintaining a facility in the area, providing a mobile branch, or providing electronic access to credit union services, subject to such rules as the Director may promulgate.

(b) Individuals, wherever located, who make less than 80% of the average for all wage earners as established by the Bureau of Labor Statistics, or individuals whose annual household income falls at or below 80% of median household income for the nation as established by the Census Bureau, may be admitted to membership in a credit union, subject to such rules as the Director may promulgate.

(c) Credit unions desiring to serve the economically disadvantaged in accordance with this Section shall do so pursuant to a written business plan that shall document the fact that the area or persons meet the criteria of this Section, identify the credit and depository needs of the area or persons, identify the services to be delivered, and describe the manner in which the services will be delivered.

(205 ILCS 305/23) (from Ch. 17, par. 4424)

Sec. 23. Compensation of officials.

(1) No director or committee member may receive compensation for his service as such. "Compensation" as used in this subsection (1) refers to remuneration expense to the credit union for services provided by a director or committee member in his or her capacity as director or committee member. "Compensation" as used in this subsection (1) does not include the expense of providing reasonable life, health, accident, and similar insurance protection benefits for a director or committee member.

(2) Directors, committee members and employees, while on official business of the credit union, may be reimbursed for reasonable and necessary expenses. Alternatively, the credit union may make direct payment to a third party for such business expenses. Reasonable and necessary expenses may include the payment of travel costs for the foregoing officials and one guest per official. All payment of costs shall be made in accordance with written policies and procedures established by the Board of Directors.

(3) The Board of Directors may establish compensation for officers of the credit union.

(Source: P.A. 92-608, eff. 7-1-02.)

(205 ILCS 305/26) (from Ch. 17, par. 4427)

Sec. 26. Executive Officers. (1) At their first meeting, the Board of Directors shall elect from among their own number a Chairman of the Board and one or more Vice Chairmen, a Secretary and a Treasurer. The Directors shall appoint a chief management official who shall have such title as the Directors shall determine. The Directors President and may also appoint one or more Vice Presidents. The President shall be the chief operating officer of the credit union. The chief management official President and Vice President may, but need not, be Directors. Any two or more offices may be held by the same person, except the Chairman of the Board President may not also hold the office of Vice Chairman President or Secretary.

(2) The officers shall serve for a term of one year, or until their successors are chosen and have been duly qualified.

(3) The duties of the officers shall be prescribed in the bylaws. Compensation of officers shall be such as may be established by the Directors from time to time.

(Source: P.A. 81-329.)

(205 ILCS 305/30) (from Ch. 17, par. 4431)

Sec. 30. Duties of directors. It shall be the duty of the directors to:

(1) Review actions on applications for membership. A record of the Membership Committee's approval or denial of membership or management's approval or denial of membership if no Membership Committee has been appointed shall be available to the Board of Directors for inspection. A person denied membership by the Membership Committee or credit union management may appeal the denial to the Board;

(2) Provide adequate fidelity bond coverage for officers, employees, directors and committee members, and for losses caused by persons outside of the credit union, subject to rules and regulations promulgated by the Director;

(3) Determine from time to time the interest rates, not in excess of that allowed under this Act, which shall be charged on loans to members and to authorize interest refunds, if any, to members from income earned and received in proportion to the interest paid by them on such classes of loans and under such conditions as the Board prescribes. The Directors may establish different interest rates to be charged on different classes of loans;

(4) Within any limitations set forth in the credit union's bylaws, fix the maximum amount which may be loaned with and without security to a member;

(5) Declare dividends on various classes of shares in the manner and form as provided in the bylaws;

(6) Limit the number of shares which may be owned by a member; such limitations to apply alike to all members;

(7) Have charge of the investment of funds, except that the Board of Directors may designate an Investment Committee or any qualified individual or entity to have charge of making investments under policies established by the Board of Directors;

(8) Authorize the employment of or contracting with such persons or organizations as may be necessary to carry on the operations of the credit union, provided that prior approval is received from the Department before delegating substantially all managerial duties and responsibilities to a credit union organization, and fix the compensation, if any, of the officers and provide for compensation for other employees within policies established by the Board of Directors;

(9) Authorize the conveyance of property;

(10) Borrow or lend money consistent with the provisions of this Act;

(11) Designate a depository or depositories for the funds of the credit union and supervise the investment of funds;

(12) Suspend or remove, or both, for cause, any or all officers or any or all members of the Membership, Credit, Supervisory or other committees whenever, in the judgment of the Board of Directors, the best interests of the credit union will be served thereby; provided that members of the Supervisory Committee may not be suspended or removed except for failure to perform their duties; and provided that removal of any officer shall be without prejudice to the contract rights, if any, of the person so removed for failure to perform their duties;

(13) Appoint any special committees deemed necessary; and;

(14) Perform such other duties as the members may direct, and perform or authorize any action not inconsistent with this Act and not specifically reserved by the bylaws to the members.

(Source: P.A. 92-608, eff. 7-1-02; revised 1-20-03.)

Section 99. Effective date. This Act takes effect upon becoming law.