Public Act 095-0077
 
HB0744 Enrolled LRB095 04298 MJR 24339 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Banking Act is amended by changing
Section 35.2 as follows:
 
    (205 ILCS 5/35.2)  (from Ch. 17, par. 345)
    Sec. 35.2. Limitations on investments in and loans to
affiliates.
    (a) Restrictions on transactions with affiliates.
        (1) A state bank and its subsidiaries may engage in a
    covered transaction with an affiliate, as expressly
    provided in this Section 35.2, only if:
            (A) in the case of any one affiliate, the aggregate
        amount of covered transactions of the state bank and
        its subsidiaries will not exceed 10% of the unimpaired
        capital and unimpaired surplus of the state bank; and
            (B) in the case of all affiliates, the aggregate
        amount of covered transactions of the state bank and
        its subsidiaries will not exceed 20% of the unimpaired
        capital and unimpaired surplus of the state bank.
        (2) For the purpose of this Section, any transactions
    by a state bank with any person shall be deemed to be a
    transaction with an affiliate to the extent that the
    proceeds of the transaction are used for the benefit of, or
    transferred to, that affiliate.
        (3) A state bank and its subsidiaries may not purchase
    a low-quality asset from an affiliate unless the bank or
    such subsidiary, pursuant to an independent credit
    evaluation, committed itself to purchase such asset prior
    to the time such asset was acquired by the affiliate.
        (4) Any covered transactions and any transactions
    exempt under subsection (d) between a state bank and an
    affiliate shall be on terms and conditions that are
    consistent with safe and sound banking practices.
    (b) Definitions. For the purpose of this Section, the
following rules and definitions apply:
        (1) "Affiliate" with respect to a state bank means
            (A) any company that controls the state bank and
        any other company that is controlled by the company
        that controls the state bank;
            (B) a bank subsidiary of the state bank;
            (C) any company
                (i) controlled directly or indirectly, by a
            trust or otherwise, by or for the benefit of
            shareholders who beneficially or otherwise
            control, directly or indirectly, by trust or
            otherwise, the state bank or any company that
            controls the state bank; or
                (ii) a majority of the directors or trustees of
            which constitute a majority of the persons holding
            any such office with the state bank or any company
            that controls the state bank;
            (D) (i) any company, including a real estate
            investment trust, that is sponsored and advised on
            a contractual basis by the state bank or any
            subsidiary or affiliate of the state bank; or
                (ii) any investment company with respect to
            which a state bank or any affiliate thereof is an
            investment advisor. An investment advisor is
            defined as "any person (other than a bona fide
            officer, director, trustee, member of an advisory
            board, or employee of such company, as such) who
            pursuant to contract with such company regularly
            furnishes advice to such company, with respect to
            the desirability or investing in, purchasing, or
            selling securities or other property shall be
            purchased or sold by such company, and any other
            who pursuant to contract with a person as described
            above regularly performs substantially all of the
            duties undertaken by such person described above;
            but does not include a person whose advice is
            furnished solely through uniform publications to
            subscribers thereto or a person who furnishes only
            statistical and other factual information, advice
            regarding economic factors and trends, or advice
            as to occasional transactions in specific
            securities, but without generally furnishing
            advice or making recommendations regarding the
            purchase or sale of securities, or a company
            furnishing such services at cost to one or more
            investment companies, insurance companies or other
            financial institutions, or any person the
            character and amount of whose compensation for
            such services must be approved by a court.
            (E) any company the Commissioner determines as
        having a relationship with the state bank or any
        subsidiary or affiliate of the state bank, such that
        covered transactions by the state bank or its
        subsidiary with the company may be affected by the
        relationship to the detriment of the state bank or its
        subsidiary.
        (2) None of the following are considered to be an
    affiliate:
            (A) any company, other than a bank, that is a
        subsidiary of a state bank, unless a determination is
        made under subparagraph (E) of paragraph (1) not to
        exclude such subsidiary company from the definition of
        affiliate;
            (B) any company engaged solely in holding the
        premises of the state bank;
            (C) any company engaged solely in conducting a safe
        deposit business;
            (D) any company engaged solely in holding
        obligations of the United States or its agencies or
        obligations fully guaranteed by the United States or
        its agencies as to principal and interest; and
            (E) any company where control results from the
        exercise of rights arising out of a bona fide debt
        previously contracted, but only for the period of time
        specifically authorized under applicable State and
        federal law or regulations or, in the absence of such
        law or regulation, for a period of 2 years from the
        date of the exercise of such rights or the effective
        date of this Act, whichever date is later, subject,
        upon application, to authorization by the Commissioner
        for good cause shown of extensions of time for not more
        than one year at a time, with such extensions not to
        exceed an aggregate of 3 years.
        (3) (A) A company or shareholder has control over
        another company if
                (i) such company or shareholder, directly or
            indirectly, or acting through one or more other
            persons, owns, controls, or has power to vote 25%
            or more of any class of voting securities of the
            other company;
                (ii) such company or shareholder controls in
            any manner the election of a majority of the
            directors or trustees of the other company; or
                (iii) the Commissioner determines, after
            notice and opportunity for hearing, that such
            company or shareholder, directly or indirectly,
            exercises a controlling influence over the
            management or policies of the other company.
            (B) Notwithstanding any other provisions of this
        Section, no company shall be deemed to own or control
        another company by virtue of its ownership or control
        of shares in a fiduciary capacity, except as provided
        in subparagraph (C) of paragraph (1) or because of its
        ownership or control of such shares in a business
        trust.
        (4) "Subsidiary" with respect to a specified company
    means a company that is controlled by such specified
    company.
        (5) "Bank" means any bank now or hereafter organized
    under the laws of any State or territory of the United
    States including the District of Columbia, any national
    bank, and any trust company.
        (6) "Company" means a corporation, partnership,
    business trust, association, or similar organization and,
    unless specifically excluded, includes a "state bank" and a
    "bank".
        (7) "Covered transaction" means, with respect to an
    affiliate of a state bank,
            (A) a loan or extension of credit to the affiliate;
            (B) a purchase of or an investment in securities
        issued by the affiliate;
            (C) a purchase of assets, including assets subject
        to an agreement to repurchase, from the affiliate,
        except such purchases of real and personal property as
        may be specifically exempted by the Commissioner;
            (D) the acceptance of securities issued by the
        affiliate as collateral security for a loan or
        extension of credit to any person or company; or
            (E) the issuance of a guarantee, acceptance, or
        letter of credit, including an endorsement or standby
        letter of credit, on behalf of an affiliate.
        (8) "Aggregate amount of covered transactions" means
    the amount of covered transactions about to be engaged in
    added to the current amount of all outstanding covered
    transactions.
        (9) "Securities" means stocks, bonds, debentures,
    notes or other similar obligations.
        (10) "Low-quality asset" means an asset that falls into
    any one or more of the following categories:
            (A) an asset classified as "substandard",
        "doubtful", or "loss" or treated as "other loans
        especially mentioned" in the most recent report of
        examination of an affiliate;
            (B) an asset in a nonaccrual status;
            (C) an asset on which principal or interest
        payments are more than 30 days past due; or
            (D) an asset whose terms have been renegotiated or
        compromised due to the deteriorating financial
        condition of the obligor.
    (c) Collateral for certain transactions with affiliates.
        (1) Each loan or extension of credit to, or guarantee,
    acceptance or letter of credit issued on behalf of, an
    affiliate by a state bank or its subsidiary shall be
    secured at the time of the transaction by collateral having
    a market value equal to
            (A) 100% of the amount of such loan or extension of
        credit, guarantee, acceptance, or letter of credit, if
        the collateral is composed of
                (i) obligations of the United States or its
            agencies;
                (ii) obligations fully guaranteed by the
            United States or its agencies as to principal and
            interest;
                (iii) notes, drafts, bills of exchange or
            bankers' acceptances that are eligible for
            rediscount or purchase by a Federal Reserve Bank;
            or
                (iv) a segregated, earmarked deposit account
            with the state bank;
            (B) 110% of the amount of such loan or extension of
        credit, guarantee, acceptance or letter of credit if
        the collateral is composed of obligations of any state
        or political subdivision of any State;
            (C) 120% of the amount of such loan or extension of
        credit, guarantee, acceptance, or letter of credit if
        the collateral is composed of other debt instruments,
        including receivables; and
            (D) 130% of the amount of such loan or extension of
        credit, guarantee, acceptance or letter of credit if
        the collateral is composed of stock, leases, or other
        real or personal property.
        (2) Any such collateral that is subsequently retired or
    amortized shall be replaced by additional eligible
    collateral where needed to keep the percentage of the
    collateral value relative to the amount of the outstanding
    loan or extension of credit, guarantee, acceptance, or
    letter of credit equal to the minimum percentage required
    at the inception of the transaction.
        (3) A low-quality asset shall not be acceptable as
    collateral for a loan or extension of credit to, or
    guarantee, acceptance, or letter of credit issued on behalf
    of, an affiliate.
        (4) The securities issued by an affiliate of the state
    bank shall not be acceptable as collateral for a loan or
    extension of credit to, or guarantee, acceptance or letter
    of credit issued on behalf of, that affiliate or any other
    affiliate of the state bank.
        (5) The collateral requirements of this paragraph do
    not apply to an acceptance that is already fully secured
    either by attached documents or by other property having an
    ascertainable market value that is involved in the
    transaction.
    (d) Exemptions. The provisions of this Section, except
paragraph (4) of subsection (a), shall not be applicable to the
following as to which there shall be no limitation:
        (1) any transaction, subject to the prohibition
    contained in paragraph (3) of subsection (a), with a bank
            (A) which controls 80% or more of the voting shares
        of the state bank;
            (B) in which the state bank controls 80% or more of
        the voting shares; or
            (C) in which 80% or more of the voting shares are
        controlled by the company that controls 80% or more of
        the voting shares of the state bank;
        (2) making deposits in an affiliated bank or affiliated
    foreign bank in the ordinary course of correspondent
    business, subject to any restrictions that the
    Commissioner may prescribe;
        (3) giving immediate credit to an affiliate for
    uncollected items received in the ordinary course of
    business;
        (4) making a loan or extension of credit to, or issuing
    a guarantee, acceptance, or letter of credit on behalf of,
    an affiliate that is fully secured by
            (A) obligations of the United States or its
        agencies;
            (B) obligations fully guaranteed by the United
        States or its agencies as to principal and interest; or
            (C) a segregated, earmarked deposit account with
        the state bank;
        (5) purchasing securities issued by any company of the
    kinds described as follows:
        Shares of any company engaged or to be engaged solely
    in one or more of the following activities: holding or
    operating properties used wholly or substantially by any
    banking subsidiary of such bank holding company in the
    operations of such banking subsidiary or acquired for such
    future use; or conducting a safe deposit business; or
    furnishing services to or performing services for such bank
    holding company or its banking subsidiaries; or
    liquidating assets acquired from such bank holding company
    or its banking subsidiaries or acquired from any other
    source prior to May 9, 1956, or the date on which such
    company became a bank holding company, whichever is later;
        (6) purchasing assets having a readily identifiable
    and publicly available market quotation and purchased at
    the market quotation or, subject to the prohibition
    contained in paragraph (3) of subsection (a), purchasing
    loans on a nonrecourse basis from affiliated banks; and
        (7) purchasing from an affiliate a loan or extension of
    credit that was originated by the state bank and sold to
    the affiliate subject to a repurchase agreement or with
    recourse.
    (e) Notwithstanding the provisions of this Section, a state
bank and its subsidiaries in compliance with the provisions of
Regulation W [12 C.F.R. Part 223] promulgated by the Board of
Governors of the Federal Reserve, as amended from time to time,
shall be deemed to be in compliance with this Section.
    This Section shall apply to any transaction entered into
after January 1, 1984, except for transactions which are the
subject of a binding written contract or commitment entered
into on or before July 28, 1982, and except that any renewal of
a participation in a loan outstanding on July 28, 1982, to a
company that becomes an affiliate as a result of the enactment
of this Act, or any participation in a loan to such an
affiliate emanating from the renewal of a binding written
contract or commitment outstanding on July 28, 1982, shall not
be subject to the collateral requirements of this Act.
(Source: P.A. 88-546; 89-364, eff. 8-18-95.)
 
    Section 10. The Banking Emergencies Act is amended by
changing Section 2 as follows:
 
    (205 ILCS 610/2)  (from Ch. 17, par. 1002)
    Sec. 2. Power of Commissioner.
    (a) Whenever the Commissioner is notified by any officer of
a bank or by any other means becomes aware that an emergency
exists, or is impending, he may, by proclamation, authorize all
banks in the State of Illinois to close any or all of their
offices, or if only a bank or banks, or offices thereof, in a
particular area or areas of the State of Illinois are affected
by the emergency or impending emergency, the Commissioner may
authorize only the affected bank, banks, or offices thereof, to
close. The office or offices so closed may remain closed until
the Commissioner declares, by further proclamation, that the
emergency or impending emergency has ended. The Commissioner
during an emergency or while an impending emergency exists,
which affects, or may affect, a particular bank or banks, or a
particular office or offices thereof, but not banks located in
the area generally of the said county or municipality, may
authorize the particular bank or banks, or office or offices so
affected, to close. The office or offices so closed shall
remain closed until the Commissioner is notified by a bank
officer of the closed bank that the emergency has ended. The
Commissioner shall notify, at such time, the officers of the
bank that one or more offices, heretofore closed because of the
emergency, should reopen and, in either event, for such further
time thereafter as may reasonably be required to reopen.
    (b) Whenever the Commissioner becomes aware that an
emergency exists, or is impending, he or she may, by
proclamation, authorize any bank organized under the laws of
another state, or of the United States, to open and operate
offices in this State, notwithstanding any other laws of this
State to the contrary. Any office or offices opened in
accordance with this subsection may remain open until the
Commissioner declares, by further proclamation, that the
emergency or impending emergency has ended. The Department of
Financial and Professional Regulation shall adopt rules to
implement this subsection (b).
(Source: P.A. 92-483, eff. 8-23-01.)
 
    Section 15. The Financial Institutions Electronic
Documents and Digital Signature Act is amended by changing
Sections 5 and 10 as follows:
 
    (205 ILCS 705/5)
    Sec. 5. Definitions. As used in this Act:
    "Digital signature" means an encrypted electronic
identifier, created by computer, intended by the party using it
to have the same force and effect as the use of a manual
signature.
    "Financial institution" means a bank, a savings and loan
association, a savings bank, or a credit union or any
subsidiary or affiliate of a bank, savings and loan
association, savings bank, or credit union.
    "Substitute check" means a paper reproduction of an
original check, as defined in the Check Clearing for the 21st
Century Act (12 U.S.C. 5001, et seq.), as amended from time to
time, and the rules promulgated thereunder.
(Source: P.A. 94-458, eff. 8-4-05.)
 
    (205 ILCS 705/10)
    Sec. 10. Electronic documents; digital signatures;
electronic notices.
    (a) Electronic documents. If in the regular course of
business, a financial institution possesses, records, or
generates any document, representation, image, substitute
check, reproduction, or combination thereof, of any agreement,
transaction, act, occurrence, or event by any electronic or
computer-generated process that accurately reproduces,
comprises, or records the agreement, transaction, act,
occurrence, or event, the recording, comprising, or
reproduction shall have the same force and effect under the
laws of this State as one comprised, recorded, or created on
paper or other tangible form by writing, typing, printing, or
similar means.
    (b) Digital signatures. In any communication,
acknowledgement, agreement, or contract between a financial
institution and its customer, in which a signature is required
or used, any party to the communication, acknowledgement,
agreement, or contract may affix a signature by use of a
digital signature, and the digital signature, when lawfully
used by the person whose signature it purports to be, shall
have the same force and effect as the use of a manual signature
if it is unique to the person using it, is capable of
verification, is under the sole control of the person using it,
and is linked to data in such a manner that if the data are
changed, the digital signature is invalidated. Nothing in this
Section shall require any financial institution or customer to
use or permit the use of a digital signature.
    (c) Electronic notices.
        (1) Consent to electronic records. If a statute,
    regulation, or other rule of law requires that information
    relating to a transaction or transactions in or affecting
    intrastate commerce in this State be provided or made
    available by a financial institution to a consumer in
    writing, the use of an electronic record to provide or make
    available that information satisfies the requirement that
    the information be in writing if:
            (A) the consumer has affirmatively consented to
        the use of an electronic record to provide or make
        available that information and has not withdrawn
        consent;
            (B) the consumer, prior to consenting, is provided
        with a clear and conspicuous statement:
                (i) informing the consumer of:
                    (I) any right or option of the consumer to
                have the record provided or made available on
                paper or in nonelectronic form, and
                    (II) the right of the consumer to withdraw
                the consent to have the record provided or made
                available in an electronic form and of any
                conditions, consequences (which may include
                termination of the parties' relationship), or
                fees in the event of a withdrawal of consent;
                (ii) informing the consumer of whether the
            consent applies:
                    (I) only to the particular transaction
                that gave rise to the obligation to provide the
                record, or
                    (II) to identified categories of records
                that may be provided or made available during
                the course of the parties' relationship;
                (iii) describing the procedures the consumer
            must use to withdraw consent, as provided in clause
            (i), and to update information needed to contact
            the consumer electronically; and
                (iv) informing the consumer:
                    (I) how, after the consent, the consumer
                may, upon request, obtain a paper copy of an
                electronic record, and
                    (II) whether any fee will be charged for a
                paper copy;
            (C) the consumer:
                (i) prior to consenting, is provided with a
            statement of the hardware and software
            requirements for access to and retention of the
            electronic records; and
                (ii) consents electronically, or confirms his
            or her consent electronically, in a manner that
            reasonably demonstrates that the consumer can
            access information in the electronic form that
            will be used to provide the information that is the
            subject of the consent; and
            (D) after the consent of a consumer in accordance
        with subparagraph (A), if a change in the hardware or
        software requirements needed to access or retain
        electronic records creates a material risk that the
        consumer will not be able to access or retain a
        subsequent electronic record that was the subject of
        the consent, the person providing the electronic
        record:
                (i) provides the consumer with a statement of:
                    (I) the revised hardware and software
                requirements for access to and retention of the
                electronic records, and
                    (II) the right to withdraw consent without
                the imposition of any fees for the withdrawal
                and without the imposition of any condition or
                consequence that was not disclosed under
                subparagraph (B)(i); and
                (ii) again complies with subparagraph (C).
        (2) Other rights.
            (A) Preservation of consumer protections. Nothing
        in this subsection (c) affects the content or timing of
        any disclosure or other record required to be provided
        or made available to any consumer under any statute,
        regulation, or other rule of law.
            (B) Verification or acknowledgment. If a law that
        was enacted prior to this amendatory Act of the 95th
        General Assembly expressly requires a record to be
        provided or made available by a specified method that
        requires verification or acknowledgment of receipt,
        the record may be provided or made available
        electronically only if the method used provides the
        required verification or acknowledgment of receipt.
        (3) Effect of failure to obtain electronic consent or
    confirmation of consent. The legal effectiveness,
    validity, or enforceability of any contract executed by a
    consumer shall not be denied solely because of the failure
    to obtain electronic consent or confirmation of consent by
    that consumer in accordance with paragraph (1)(C)(ii).
        (4) Prospective effect. Withdrawal of consent by a
    consumer shall not affect the legal effectiveness,
    validity, or enforceability of electronic records provided
    or made available to that consumer in accordance with
    paragraph (1) prior to implementation of the consumer's
    withdrawal of consent. A consumer's withdrawal of consent
    shall be effective within a reasonable period of time after
    receipt of the withdrawal by the provider of the record.
    Failure to comply with paragraph (1)(D) may, at the
    election of the consumer, be treated as a withdrawal of
    consent for purposes of this paragraph.
        (5) Prior consent. This subsection does not apply to
    any records that are provided or made available to a
    consumer who has consented prior to the effective date of
    this amendatory Act of the 95th General Assembly to receive
    the records in electronic form as permitted by any statute,
    regulation, or other rule of law.
        (6) Oral communications. An oral communication or a
    recording of an oral communication shall not qualify as an
    electronic record for purposes of this subsection (c),
    except as otherwise provided under applicable law.
(Source: P.A. 94-458, eff. 8-4-05.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.