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91_SB0890eng SB890 Engrossed LRB9105132JSpcA 1 AN ACT to create the Illinois Financial Institutions Year 2 2000 Safety and Soundness Act. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 1. Short title. This Act may be cited as the 6 Illinois Financial Institutions Year 2000 Safety and 7 Soundness Act. 8 Section 5. Findings and declarations of policy. The 9 General Assembly hereby finds and declares that: 10 (1) the economic strength and general welfare of 11 Illinois depends on strong, safe and sound financial 12 institutions that command the highest levels of public 13 confidence among the citizens of this State; 14 (2) Illinois financial institutions are highly 15 monitored and closely supervised by federal and state 16 regulatory agencies which impose strict compliance 17 standards and conduct regular and frequent examinations 18 on these institutions; 19 (3) countless computer systems, software programs, 20 microchips, and integrated circuits have been created, 21 distributed, installed, and relied upon throughout this 22 State and the world which are not capable of recognizing 23 certain dates in 1999 and after December 31, 1999, and 24 which will read dates in the year 2000 and thereafter as 25 if those dates represent the year 1900 or thereafter, or 26 which will fail to process those dates (commonly referred 27 to as the "Year 2000 Problem"); 28 (4) the federal and state regulatory agencies which 29 regulate Illinois financial institutions have required 30 these institutions to undergo exhaustive planning, 31 remediation, testing, and contingency preparedness to SB890 Engrossed -2- LRB9105132JSpcA 1 properly address the Year 2000 Problem with respect to 2 both internal and external mission critical computer 3 systems, internal and external non-mission critical 4 computer systems, third party vendors, customers, and 5 other possible sources of business interruption, and are 6 closely monitoring, examining, and supervising these 7 efforts on an institution by institution basis; 8 (5) Illinois financial institutions have expended 9 hundreds of millions of dollars on reprogramming, 10 replacing and testing their computer systems to properly 11 address the Year 2000 Problem and continue to be 12 accountable to their federal and state regulatory 13 agencies for meeting the strict safety and soundness 14 standards imposed on them in connection with the Year 15 2000 Problem; 16 (6) Illinois financial institutions are integral to 17 the payments system and credit and savings bases relied 18 on by all other businesses, governmental entities, and 19 citizens of this State irrespective of whether those 20 businesses, governmental entities, and citizens have 21 addressed and implemented solutions in connection with 22 the Year 2000 Problem; and 23 (7) it is in the interests of this State to 24 recognize the unique and rigorous standards required of 25 Illinois financial institutions in connection with the 26 Year 2000 Problem and their integral role in maintaining 27 the payments system and credit and savings bases in this 28 State and to preserve public confidence in these 29 institutions and ensure their safety and soundness, 30 thereby protecting and enhancing the economy and general 31 welfare of this State, by providing uniform and judicious 32 legal standards for Illinois financial institutions in 33 connection with the Year 2000 Problem. SB890 Engrossed -3- LRB9105132JSpcA 1 Section 10. Definitions. For the purposes of this Act: 2 (a) The term "Illinois financial institution" means: 3 (1) a State bank, a national bank, or an 4 out-of-state bank, as those terms are defined in the 5 Illinois Banking Act, or any subsidiary of a State bank, 6 a national bank, or an out-of-state bank; 7 (2) a foreign banking corporation, as that term is 8 defined in the Foreign Banking Office Act, or any 9 subsidiary of a foreign banking corporation; 10 (3) a corporate fiduciary, as that term is defined 11 in the Corporate Fiduciary Act, or any subsidiary of a 12 corporate fiduciary; 13 (4) a savings bank organized under the Savings Bank 14 Act, an out-of-state savings bank chartered under the 15 laws of a state other than Illinois, a territory of the 16 United States, or the District of Columbia, or a federal 17 savings bank organized under federal law, or any 18 subsidiary of a savings bank, an out-of-state savings 19 bank or a federal savings bank; 20 (5) an association or federal association, as those 21 terms are defined in the Illinois Savings and Loan Act of 22 1985, or any subsidiary of an association or federal 23 association; 24 (6) an out-of-state savings and loan association 25 chartered under the laws of a state other than Illinois, 26 a territory of the United States, or the District of 27 Columbia, or a federal savings and loan association 28 organized under federal law whose principal business 29 office is located outside of Illinois, or any subsidiary 30 of an out-of-state savings and loan association or 31 federal savings and loan association whose principal 32 business office is located outside of Illinois; 33 (7) a credit union, as defined in the Illinois 34 Credit Union Act, or any subsidiary of a credit union; SB890 Engrossed -4- LRB9105132JSpcA 1 (8) a network owned by one or more financial 2 institutions, as those terms are defined in the 3 Electronic Fund Transfer Act; 4 (9) a lender subject to licensing under the 5 Consumer Installment Loan Act or the Residential Mortgage 6 License Act of 1987, in connection with any credit 7 subject to the provisions of those Acts; or 8 (10) a sales finance agency subject to the Sales 9 Finance Agency Act, the Retail Installment Sales Act, or 10 the Motor Vehicle Retail Installment Sales Act, in 11 connection with any credit subject to the provisions of 12 those Acts. 13 The terms in this subsection (a) also shall be deemed to 14 include a direct or indirect holding company of an Illinois 15 financial institution in connection with a Year 2000 claim 16 involving the Illinois financial institution directly or 17 indirectly owned by such holding company. 18 (b) The term "Year 2000 failure" means any failure by 19 any device or system (including, without limitation, any 20 computer system and any microchip or integrated circuit 21 embedded in another device or product), or any software, 22 firmware, or other set or collection of processing 23 instructions, however constructed, in processing, 24 calculating, comparing, sequencing, displaying, storing, 25 transmitting, or receiving date-related data during the years 26 1999 and 2000 or from, into, or between the twentieth 27 century and the twenty-first century, or the failure to 28 recognize or accurately process any specific date, or the 29 failure to accurately account for the status of the year 2000 30 as a leap year. 31 (c) The term "Year 2000 action" means a civil action of 32 any kind brought under Illinois law, except for a civil 33 action brought by a federal or state agency that regulates 34 the Illinois financial institution, in which: SB890 Engrossed -5- LRB9105132JSpcA 1 (1) a Year 2000 claim is asserted; or 2 (2) any claim or defense is related, directly or 3 indirectly, to a Year 2000 claim. 4 (d) The term "Year 2000 claim" means any claim or cause 5 of action of any kind, whether asserted by way of claim, 6 counterclaim, cross-claim, third-party claim, or otherwise, 7 in which a party or other person's loss or harm is alleged to 8 have resulted, directly or indirectly, from any act or 9 omission in connection with an actual or potential Year 2000 10 failure, except for claims involving physical injury to the 11 extent of the claim of physical injury. 12 (e) The term "physical injury" means any physical injury 13 to a natural person, including the death of the person, but 14 does not include mental suffering, emotional distress, or 15 other similar elements of injury that do not constitute 16 physical harm to a natural person. 17 Section 15. Action for damages. An Illinois financial 18 institution shall not be directly or indirectly liable in a 19 Year 2000 action for damages incurred by persons not in 20 privity of contract with the Illinois financial institution 21 in connection with the transaction that gave rise to the Year 22 2000 claim. 23 Section 20. Notice of claim. No person shall bring a 24 Year 2000 action or make a Year 2000 claim against an 25 Illinois financial institution unless the person has given 26 written notice to the Illinois financial institution of the 27 person's Year 2000 claim and the Illinois financial 28 institution has been afforded at least 30 days after receipt 29 of the notice to resolve the claim. 30 Section 25. Employees, officers, directors, and agents. 31 No employee, officer, director, or agent of an Illinois SB890 Engrossed -6- LRB9105132JSpcA 1 financial institution shall be liable to any person for 2 damages in a Year 2000 action, except for an act or omission 3 that constitutes fraud; provided that this Section shall not 4 preclude a Year 2000 action against an Illinois financial 5 institution that is otherwise permitted by law. 6 Section 30. Unaffected rights. The provisions of this 7 Act shall not affect the rights of parties under Articles 3, 8 4, 4A, and 8 of the Uniform Commercial Code and other rules 9 governing the processing of check, credit, debit, ACH, and 10 wire transactions, provided that such rights shall be 11 strictly construed to further the purposes and policies of 12 the provisions therein and the application of such 13 construction is not likely to impair the safety and soundness 14 of the Illinois financial institution. 15 Section 90. Severability. The provisions of this Act 16 are severable under Section 1.31 of the Statute on Statutes. 17 Section 92. The Consumer Deposit Account Act is amended 18 by adding Section 6 as follows: 19 (205 ILCS 605/6 new) 20 Sec. 6. Charges on customer's account resulting from a 21 Year 2000 failure. If a Year 2000 failure, as defined in 22 Section 10 of the Illinois Financial Institutions Year 2000 23 Safety and Soundness Act, causes a financial institution or 24 credit union to assess a charge or fee against the account of 25 any deposit customer for having insufficient funds on deposit 26 to pay a check drawn on that account by that customer or for 27 having insufficient funds on deposit to satisfy any minimum 28 balance requirement pertaining to that account, such charge 29 or fee shall be rescinded if (i) sufficient funds were in the 30 account at the relevant time, (ii) the charge or fee was SB890 Engrossed -7- LRB9105132JSpcA 1 attributable to the Year 2000 failure and would not otherwise 2 have been authorized, and (iii) the financial institution or 3 credit union is notified of and verifies the imposition of 4 the charge or fee. 5 Section 93. The Interest Act is amended by changing 6 Section 6 as follows: 7 (815 ILCS 205/6) (from Ch. 17, par. 6413) 8 Sec. 6. (a) If any person or corporation knowingly 9 contracts for or receives, directly or indirectly, by any 10 device, subterfuge or other means, unlawful interest, 11 discount or charges for or in connection with any loan of 12 money, the obligor may, recover by means of an action or 13 defense an amount equal to twice the total of all interest, 14 discount and charges determined by the loan contract or paid 15 by the obligor, whichever is greater, plus such reasonable 16 attorney's fees and court costs as may be assessed by a court 17 against the lender. The payments due and to become due 18 including all interest, discount and charges included therein 19 under the terms of the loan contract, shall be reduced by the 20 amount which the obligor is thus entitled to recover. 21 Recovery by means of a defense may be had at any time after 22 the loan is transacted. Recovery by means of an action may be 23 had at any time after the loan is transacted and prior to the 24 expiration of 2 years after the earlier of (1) the date of 25 the last scheduled payment of the loan after giving effect to 26 all renewals or extensions thereof, if any, or (2) the date 27 on which the total amount due under the terms of the loan 28 contract is fully paid. A bona fide error in connection with 29 a loan shall not be a violation under this section if the 30 lender corrects the error within a reasonable time. 31 (b) If a Year 2000 failure, as defined in Section 10 of 32 the Illinois Financial Institutions Year 2000 Safety and SB890 Engrossed -8- LRB9105132JSpcA 1 Soundness Act, at or attributable to a lender or the lender's 2 agent or service provider causes that lender to assess a 3 charge or fee against its loan customer for non-payment or 4 delinquent payment of a loan or of any payment due under the 5 terms of a loan agreement, such charge or fee shall be 6 rescinded if (i) the payment on the loan was timely made, 7 (ii) the charge or fee was attributable to the Year 2000 8 failure and would not otherwise have been authorized, and 9 (iii) the lender is notified of and verifies the imposition 10 of the charge or fee. 11 (c) No person shall be liable under this Act for any act 12 done or omitted in good faith in conformity with any rule, 13 regulation, interpretation, or opinion issued by the 14 Commissioner of Banks and Real Estate or the Department of 15 Financial Institutions or any other department or agency of 16 the State, notwithstanding that after such act or omission 17 has occurred, such rule, regulation, interpretation, or 18 opinion is amended, rescinded, or determined by judicial or 19 other authority to be invalid for any reason. 20 (Source: P.A. 90-161, eff. 7-23-97.) 21 Section 99. Effective Date. This Act takes effect upon 22 becoming law.