103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5372
 
Introduced , by Rep. Jay Hoffman
 
SYNOPSIS AS INTRODUCED:

30 ILCS 105/5.1015 new
205 ILCS 305/2 from Ch. 17, par. 4403
205 ILCS 305/8 from Ch. 17, par. 4409
205 ILCS 305/9 from Ch. 17, par. 4410
205 ILCS 305/12.5 new
205 ILCS 305/13 from Ch. 17, par. 4414
205 ILCS 305/39 from Ch. 17, par. 4440
205 ILCS 305/59 from Ch. 17, par. 4460
 Amends the Illinois Credit Union Act. Provides that a credit union regulated by the Department of Financial and Professional Regulation that is a covered financial institution under the Illinois Community Reinvestment Act shall pay an examination fee to the Department subject to the adopted by the Department. Provides that the aggregate of all credit union examination fees collected by the Department under the Illinois Community Reinvestment Act shall be paid and transferred promptly, accompanied by a detailed statement, into the State Treasury and shall be set apart in the Credit Union Community Reinvestment Act Fund. Provides the limits to the amounts of funds that a credit union may invest in the purchase of an investment interest in a pool of loans when the investment is greater than the net worth of the credit union. Provides that credit unions may invest funds in derivatives transactions to aid in the credit union's management of interest rate risk if certain specified conditions are satisfied. Makes changes to provisions concerning conflicts between bylaws adopted by the subscribers of a credit union and the Act. Makes changes to provisions concerning rules adopted by the Secretary of Financial and Professional Regulation and the Act. Makes other changes. Amends the State Finance Act. Creates the Credit Union Community Reinvestment Act Fund. Effective immediately.


LRB103 39216 RTM 69366 b


 
 
A BILL FOR
 
HB5372LRB103 39216 RTM 69366 b


1 AN ACT concerning regulation.

2 Be it enacted by the People of the State of Illinois, 
3represented in the General Assembly:

4 Section 5. The State Finance Act is amended by adding 
5Section 5.1015 as follows:

6 (30 ILCS 105/5.1015 new)
7 Sec. 5.1015. The Credit Union Community Reinvestment Act 
8Fund.

9 Section 10. The Illinois Credit Union Act is amended by 
10changing Sections 2, 8, 9, 13, 39, and 59 and by adding Section 
1112.5 as follows:

12 (205 ILCS 305/2) (from Ch. 17, par. 4403)
13 Sec. 2. Organization procedure. 
14 (1) Any 9 or more persons of legal age, the majority of 
15whom shall be residents of the State of Illinois, who have a 
16common bond referred to in Section 1.1 may organize a credit 
17union or a central credit union by complying with this 
18Section.
19 (2) The subscribers shall execute in duplicate Articles of 
20Incorporation and agree to the terms thereof, which Articles 
21shall state:
 
 
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1  (a) The name, which shall include the words "credit 
2 union" and which shall not be the same as that of any other 
3 existing credit union in this state, and the location 
4 where the proposed credit union is to have its principal 
5 place of business;
6  (b) The common bond of the members of the credit 
7 union;
8  (c) The par value of the shares of the credit union, 
9 which must be at least $1;
10  (d) The names, addresses and Social Security numbers 
11 of the subscribers to the Articles of Incorporation, and 
12 the number and the value of shares subscribed to by each;
13  (e) That the credit union may exercise such incidental 
14 powers as are necessary or requisite to enable it to carry 
15 on effectively the purposes for which it is incorporated, 
16 and those powers which are inherent in the credit union as 
17 a legal entity;
18  (f) That the existence of the credit union shall be 
19 perpetual.
20 (3) The subscribers shall prepare and adopt bylaws for the 
21general governance government of the credit union, consistent 
22with this Act, and execute same in duplicate. If there is a 
23conflict, inconsistency, or variation between the terms of 
24this Act and the provisions in the bylaws adopted by the credit 
25union, the terms of this Act shall control. A conflict, 
26inconsistency, or variation may not be deemed to exist if the 
 
 
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1Act specifically requires that a particular matter shall be 
2adopted in the bylaws. 
3 (4) The subscribers shall forward the articles of 
4incorporation and the bylaws to the Secretary in duplicate, 
5along with the required charter fee. If they conform to the 
6law, and such rules and regulations as the Secretary and the 
7Director may prescribe, if the Secretary determines that a 
8common bond exists, and that it is economically advisable to 
9organize the credit union, he or she shall within 60 days issue 
10a certificate of approval attached to the articles of 
11incorporation and return a copy of the bylaws and the articles 
12of incorporation to the applicants or their representative, 
13which shall be preserved in the permanent files of the credit 
14union. The subscribers shall file the certificate of approval, 
15with the articles of incorporation attached, in the office of 
16the recorder (or, if there is no recorder, in the office of the 
17county clerk) of the county in which the credit union is to 
18locate its principal place of business. The recorder or the 
19county clerk, as the case may be, shall accept and record the 
20documents if they are accompanied by the proper fee. When the 
21documents are so recorded, the credit union is incorporated 
22under this Act.
23 (5) The subscribers for a credit union charter shall not 
24transact any business until the certificate of approval has 
25been received.
26(Source: P.A. 100-361, eff. 8-25-17.)

 
 
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1 (205 ILCS 305/8) (from Ch. 17, par. 4409)
2 Sec. 8. Secretary's powers and duties. Credit unions are 
3regulated by the Department. The Secretary in executing the 
4powers and discharging the duties vested by law in the 
5Department has the following powers and duties:
6  (1) To exercise the rights, powers, and duties set 
7 forth in this Act or any related Act. The Director shall 
8 oversee the functions of the Division and report to the 
9 Secretary, with respect to the Director's exercise of any 
10 of the rights, powers, and duties vested by law in the 
11 Secretary under this Act. All references in this Act to 
12 the Secretary shall be deemed to include the Director, as 
13 a person authorized by the Secretary or this Act to assume 
14 responsibility for the oversight of the functions of the 
15 Department relating to the regulatory supervision of 
16 credit unions under this Act. 
17  (2) To adopt prescribe rules and regulations for the 
18 administration of this Act. The provisions of the Illinois 
19 Administrative Procedure Act are hereby expressly adopted 
20 and incorporated herein as though a part of this Act, and 
21 shall apply to all administrative rules and procedures of 
22 the Department under this Act. Rules adopted by the 
23 Secretary shall be within the statutory authority upon 
24 which they are based. If there is a conflict, 
25 inconsistency, or variation between the terms of this Act 
 
 
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1 and the provisions in a rule adopted by the Secretary, the 
2 terms of this Act shall control. A conflict, 
3 inconsistency, or variation may not be deemed to exist if 
4 the Act specifically delegates authority to the Secretary 
5 to adopt by rule standards or limitations on a particular 
6 matter, provided the rule is within the statutory 
7 authority upon which it is based. 
8  (3) To direct and supervise all the administrative and 
9 technical activities of the Department including the 
10 employment of a Credit Union Supervisor who shall have 
11 knowledge in the theory and practice of, or experience in, 
12 the operations or supervision of financial institutions, 
13 preferably credit unions, and such other persons as are 
14 necessary to carry out his functions. The Secretary shall 
15 ensure that all examiners appointed or assigned to examine 
16 the affairs of State-chartered credit unions possess the 
17 necessary training and continuing education to effectively 
18 execute their jobs.
19  (4) To issue cease and desist orders when in the 
20 opinion of the Secretary, a credit union is engaged or has 
21 engaged, or the Secretary has reasonable cause to believe 
22 the credit union is about to engage, in an unsafe or 
23 unsound practice, or is violating or has violated or the 
24 Secretary has reasonable cause to believe is about to 
25 violate a law, rule, or regulation or any condition 
26 imposed in writing by the Department.
 
 
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1  (5) To suspend from office and to prohibit from 
2 further participation in any manner in the conduct of the 
3 affairs of any credit union any director, officer, or 
4 committee member who has committed any violation of a law, 
5 rule, or regulation or of a cease and desist order or who 
6 has engaged or participated in any unsafe or unsound 
7 practice in connection with the credit union or who has 
8 committed or engaged in any act, omission, or practice 
9 which constitutes a breach of his fiduciary duty as such 
10 director, officer, or committee member, when the Secretary 
11 has determined that such action or actions have resulted 
12 or will result in substantial financial loss or other 
13 damage that seriously prejudices the interests of the 
14 members.
15  (6) To assess a civil penalty against a credit union 
16 provided that:
17   (A) the Secretary reasonably determines, based on 
18 objective facts and an accurate assessment of 
19 applicable legal standards, that the credit union has: 
20    (i) committed a violation of this Act, any 
21 rule adopted in accordance with this Act, or any 
22 order of the Secretary issued pursuant to his or 
23 her authority under this Act; or
24    (ii) engaged or participated in any unsafe or 
25 unsound practice; 
26   (B) before a civil penalty is assessed under this 
 
 
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1 item (6), the Secretary must make the further 
2 reasonable determination, based on objective facts and 
3 an accurate assessment of applicable legal standards, 
4 that the credit union's action constituting a 
5 violation under subparagraph (i) of paragraph (A) of 
6 this item (6) or an unsafe and unsound practice under 
7 subparagraph (ii) of paragraph (A) of this item (6):
8    (i) directly resulted in a substantial and 
9 material financial loss or created a reasonable 
10 probability that a substantial and material 
11 financial loss will directly result; or
12    (ii) constituted willful misconduct or a 
13 material breach of fiduciary duty of any director, 
14 officer, or committee member of the credit union; 
15   Material financial loss, as referenced in this 
16 paragraph (B), shall be assessed in light of 
17 surrounding circumstances and the relative size and 
18 nature of the financial loss or probable financial 
19 loss. Certain benchmarks shall be used in determining 
20 whether financial loss is material, such as a 
21 percentage of total assets or total gross income for 
22 the immediately preceding 12-month period. Absent 
23 compelling and extraordinary circumstances, no civil 
24 penalty shall be assessed, unless the financial loss 
25 or probable financial loss is equal to or greater than 
26 either 1% of the credit union's total assets for the 
 
 
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1 immediately preceding 12-month period, or 1% of the 
2 credit union's total gross income for the immediately 
3 preceding 12-month period, whichever is less; 
4   (C) before a civil penalty is assessed under this 
5 item (6), the credit union must be expressly advised 
6 in writing of the:
7    (i) specific violation that could subject it 
8 to a penalty under this item (6); and
9    (ii) specific remedial action to be taken 
10 within a specific and reasonable time frame to 
11 avoid imposition of the penalty; 
12   (D) civil penalties assessed under this item (6) 
13 shall be remedial, not punitive, and reasonably 
14 tailored to ensure future compliance by the credit 
15 union with the provisions of this Act and any rules 
16 adopted pursuant to this Act; 
17   (E) a credit union's failure to take timely 
18 remedial action with respect to the specific violation 
19 may result in the issuance of an order assessing a 
20 civil penalty up to the following maximum amount, 
21 based upon the total assets of the credit union:
22    (i) Credit unions with assets of less than $10 
23 million................................................$1,000
24    (ii) Credit unions with assets of at least $10 
25 million and less than $50 million......................$2,500
26    (iii) Credit unions with assets of at least 
 
 
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1 $50 million and less than $100 million.................$5,000
2    (iv) Credit unions with assets of at least 
3 $100 million and less than $500 million...............$10,000
4    (v) Credit unions with assets of at least $500 
5 million and less than $1 billion......................$25,000
6    (vi) Credit unions with assets of $1 billion 
7 and greater.....................................$50,000; and 
8   (F) an order assessing a civil penalty under this 
9 item (6) shall take effect upon service of the order, 
10 unless the credit union makes a written request for a 
11 hearing under 38 Ill. Adm. Code 190.20 of the 
12 Department's rules for credit unions within 90 days 
13 after issuance of the order; in that event, the order 
14 shall be stayed until a final administrative order is 
15 entered. 
16  This item (6) shall not apply to violations separately 
17 addressed in rules as authorized under item (7) of this 
18 Section. 
19  (7) Except for the fees established in this Act, to 
20 prescribe, by rule and regulation, fees and penalties for 
21 preparing, approving, and filing reports and other 
22 documents; furnishing transcripts; holding hearings; 
23 investigating applications for permission to organize, 
24 merge, or convert; failure to maintain accurate books and 
25 records to enable the Department to conduct an 
26 examination; and taking supervisory actions.
 
 
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1  (8) To destroy, in his discretion, any or all books 
2 and records of any credit union in his possession or under 
3 his control after the expiration of three years from the 
4 date of cancellation of the charter of such credit unions.
5  (9) To make investigations and to conduct research and 
6 studies and to publish some of the problems of persons in 
7 obtaining credit at reasonable rates of interest and of 
8 the methods and benefits of cooperative saving and lending 
9 for such persons.
10  (10) To authorize, foster, or establish experimental, 
11 developmental, demonstration, or pilot projects by public 
12 or private organizations including credit unions which:
13   (a) promote more effective operation of credit 
14 unions so as to provide members an opportunity to use 
15 and control their own money to improve their economic 
16 and social conditions; or
17   (b) are in the best interests of credit unions, 
18 their members and the people of the State of Illinois.
19  (11) To cooperate in studies, training, or other 
20 administrative activities with, but not limited to, the 
21 NCUA, other state credit union regulatory agencies and 
22 industry trade associations in order to promote more 
23 effective and efficient supervision of Illinois chartered 
24 credit unions.
25  (12) Notwithstanding the provisions of this Section, 
26 the Secretary shall not:
 
 
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1   (1) issue an order against a credit union 
2 organized under this Act for unsafe or unsound banking 
3 practices solely because the entity provides or has 
4 provided financial services to a cannabis-related 
5 legitimate business;
6   (2) prohibit, penalize, or otherwise discourage a 
7 credit union from providing financial services to a 
8 cannabis-related legitimate business solely because 
9 the entity provides or has provided financial services 
10 to a cannabis-related legitimate business;
11   (3) recommend, incentivize, or encourage a credit 
12 union not to offer financial services to an account 
13 holder or to downgrade or cancel the financial 
14 services offered to an account holder solely because:
15    (A) the account holder is a manufacturer or 
16 producer, or is the owner, operator, or employee 
17 of a cannabis-related legitimate business;
18    (B) the account holder later becomes an owner 
19 or operator of a cannabis-related legitimate 
20 business; or
21    (C) the credit union was not aware that the 
22 account holder is the owner or operator of a 
23 cannabis-related legitimate business; and
24   (4) take any adverse or corrective supervisory 
25 action on a loan made to an owner or operator of:
26    (A) a cannabis-related legitimate business 
 
 
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1 solely because the owner or operator owns or 
2 operates a cannabis-related legitimate business; 
3 or
4    (B) real estate or equipment that is leased to 
5 a cannabis-related legitimate business solely 
6 because the owner or operator of the real estate 
7 or equipment leased the equipment or real estate 
8 to a cannabis-related legitimate business. 
9(Source: P.A. 102-858, eff. 5-13-22; 103-154, eff. 6-30-23.)

10 (205 ILCS 305/9) (from Ch. 17, par. 4410)
11 Sec. 9. Reports and examinations. 
12 (1) Credit unions shall report to the Department on forms 
13supplied by the Department, in accordance with a schedule 
14published by the Department. A recapitulation of the annual 
15reports shall be compiled and published annually by the 
16Department, for the use of the General Assembly, credit 
17unions, various educational institutions and other interested 
18parties. A credit union which fails to file any report when due 
19shall pay to the Department a late filing fee for each day the 
20report is overdue as prescribed by rule. The Secretary may 
21extend the time for filing a report. Invoices for a 5300 Call 
22Report and other reports and documents shall be paid by a 
23credit union no later than 20 days after the credit union 
24receives an invoice from the Department. If an invoice is not 
25paid in a timely manner, the Department shall continue to 
 
 
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1issue invoices to the credit union on a monthly basis 
2reflecting applicable late filing fees until the invoice is 
3paid. 
4 (2) The Secretary may require special examinations of and 
5special financial reports from a credit union or a credit 
6union organization in which a credit union loans, invests, or 
7delegates substantially all managerial duties and 
8responsibilities when he determines that such examinations and 
9reports are necessary to enable the Department to determine 
10the safety of a credit union's operation or its solvency. The 
11cost to the Department of the aforesaid special examinations 
12shall be borne by the credit union being examined as 
13prescribed by rule.
14 (3) All credit unions incorporated under this Act shall be 
15examined at least biennially by the Department or, at the 
16discretion of the Secretary, by a public accountant registered 
17by the Department of Financial and Professional Regulation. 
18The costs of an examination shall be paid by the credit union. 
19The scope of all examinations by a public accountant shall be 
20at least equal to the examinations made by the Department. The 
21examiners shall have full access to, and may compel the 
22production of, all the books, papers, securities and accounts 
23of any credit union. A special examination shall be made by the 
24Department or by a public accountant approved by the 
25Department upon written request of 5 or more members, who 
26guarantee the expense of the same. Any credit union refusing 
 
 
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1to submit to an examination when ordered by the Department 
2shall be reported to the Attorney General, who shall institute 
3proceedings to have its charter revoked. If the Secretary 
4determines that the examination of a credit union is to be 
5conducted by a public accountant registered by the Department 
6of Financial and Professional Regulation and the examination 
7is done in conjunction with the credit union's external 
8independent audit of financial statements, the requirements of 
9this Section and subsection (3) of Section 34 shall be deemed 
10met.
11 (3.5) Pursuant to Section 8, the Secretary shall adopt 
12rules that ensure consistency and due process in the 
13examination process. The Secretary may also establish 
14guidelines that (i) define the scope of the examination 
15process and (ii) clarify examination items to be resolved. The 
16rules, formal guidance, interpretive letters, or opinions 
17furnished to credit unions by the Secretary may be relied upon 
18by the credit unions.
19 (4) A copy of the completed report of examination and a 
20review comment letter, if any, citing exceptions revealed 
21during the examination, shall be submitted to the credit union 
22by the Department. A detailed report stating the corrective 
23actions taken by the board of directors on each exception set 
24forth in the review comment letter shall be filed with the 
25Department within 40 days after the date of the review comment 
26letter, or as otherwise directed by the Department. Any credit 
 
 
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1union through its officers, directors, committee members or 
2employees, which willfully provides fraudulent or misleading 
3information regarding the corrective actions taken on 
4exceptions appearing in a review comment letter may have its 
5operations restricted to the collection of principal and 
6interest on loans outstanding and the payment of normal 
7expenses and salaries until all exceptions are corrected and 
8accepted by the Department.
9 (5) The Secretary may accept an examination from the 
10National Credit Union Administration or a private insurer of 
11share deposits approved by the Secretary instead of an 
12examination conducted by the Department or by a public 
13accountant registered by the Department pursuant to subsection 
14(3). Acceptance of an examination from the National Credit 
15Union Administration or an approved private insurer of share 
16deposits shall only be permitted on an alternating basis with 
17examinations that the Department or a registered public 
18accountant conducts. 
19(Source: P.A. 102-558, eff. 8-20-21; 102-858, eff. 5-13-22.)

20 (205 ILCS 305/12.5 new)
21 Sec. 12.5. Community Reinvestment Act examination fees.  
22 (a) As used in this Section:
23 "Fiscal year" means a period beginning on July 1 of any 
24calendar year and ending on June 30 of the next calendar year.
25 "Examination fee" means the examination fee described in 
 
 
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1Section 35-15 of the Illinois Community Reinvestment Act.
2 (b) For the fiscal year beginning July 1, 2025, a credit 
3union regulated by the Department that is a covered financial 
4institution under the Illinois Community Reinvestment Act 
5shall pay an examination fee to the Department at the 
6frequency and rate set forth in rules adopted by the 
7Department implementing the Illinois Community Reinvestment 
8Act, unless exempted from the payment of the examination fee 
9by those rules. The examination fee shall be separate from and 
10in addition to the regulatory fees paid by credit unions 
11regulated by the Department as prescribed in Section 12 and 
12shall be exclusively used to defray the administrative and 
13operational expenses of the Credit Union Section of the 
14Department incidental to conducting the examinations required 
15by the Illinois Community Reinvestment Act and implementing 
16rules of the Department.
17 (c) The aggregate of all credit union examination fees 
18collected by the Department under the Illinois Community 
19Reinvestment Act shall be paid and transferred promptly, 
20accompanied by a detailed statement, into the State Treasury 
21and shall be set apart in the Credit Union Community 
22Reinvestment Act Fund. All earnings received from investment 
23of the funds in the Credit Union Community Reinvestment Act 
24Fund shall be deposited in the Fund and shall be used for the 
25same purposes as examination fees deposited into the Fund. 
26Moneys deposited into the Credit Union Community Reinvestment 
 
 
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1Act Fund may be transferred to the Professions Indirect Cost 
2Fund, as authorized under Section 2105-300 of the Department 
3of Professional Regulation Law of the Civil Administrative 
4Code of Illinois.
5 (d) The administrative and operational expenses of the 
6Credit Union Section of the Department in conducting 
7examinations shall have the same meaning and scope as the 
8administrative and operational expenses of the Credit Union 
9Section of the Department in conducting regulatory 
10examinations, as defined in subsection (5) of Section 12.
11 (e) When the balance in the Credit Union Community 
12Reinvestment Act Fund at the end of a fiscal year exceeds 25% 
13of the total administrative and operational expenses incurred 
14by the Department in administering and enforcing the Illinois 
15Community Reinvestment Act and rules of the Department in the 
16administration and enforcement of the Illinois Community 
17Reinvestment Act by conducting examinations of credit unions, 
18such excess shall be credited to credit unions and applied 
19against the credit unions' examination fees for the subsequent 
20fiscal year. The amount credited to each credit union shall be 
21in the same proportion as the examination fee paid by such 
22credit union for the fiscal year in which the excess is 
23produced bears to the aggregate amount of all examination fees 
24collected by the Department from credit unions under the 
25Illinois Community Reinvestment Act for the same fiscal year.

 
 
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1 (205 ILCS 305/13) (from Ch. 17, par. 4414)
2 Sec. 13. General powers. A credit union may: 
3  (1) Make contracts; sue and be sued; and adopt and use 
4 a common seal and alter the same; 
5  (2) Acquire, lease (either as lessee or lessor), hold, 
6 pledge, mortgage, sell and dispose of real property, 
7 either in whole or in part, or any interest therein, as may 
8 be necessary or incidental to its present or future 
9 operations and needs, subject to such limitations as may 
10 be imposed thereon in rules and regulations promulgated by 
11 the Secretary; acquire, lease (either as lessee or 
12 lessor), hold, pledge, mortgage, sell and dispose of 
13 personal property, either in whole or in part, or any 
14 interest therein, as may be necessary or incidental to its 
15 present or future operations and needs; 
16  (3) At the discretion of the board of directors, 
17 require the payment of an entrance fee or annual 
18 membership fee, or both, of any person admitted to 
19 membership; 
20  (4) Receive savings from its members in the form of 
21 shares of various classes, or special purpose share 
22 accounts; act as custodian of its members' accounts; issue 
23 shares in trust as provided in this Act; 
24  (5) Lend its funds to its members and otherwise as 
25 hereinafter provided; 
26  (6) Borrow from any source in accordance with policy 
 
 
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1 established by the board of directors to a maximum of 50% 
2 of capital, surplus and reserves; 
3  (7) Discount and sell any obligations owed to the 
4 credit union; 
5  (8) Honor requests for withdrawals or transfers of all 
6 or any part of member share accounts, and any classes 
7 thereof, in any manner approved by the credit union board 
8 of directors; 
9  (9) Sell all or a part of its assets or purchase all or 
10 a part of the assets of another credit union and assume the 
11 liabilities of the selling credit union, subject to the 
12 prior approval of the Director, which approval shall not 
13 be required in the case of loan transactions otherwise 
14 authorized under applicable law; 
15  (10) Invest surplus funds as provided in this Act; 
16  (11) Make deposits in banks, savings banks, savings 
17 and loan associations, trust companies; and invest in 
18 shares, classes of shares or share certificates of other 
19 credit unions; 
20  (12) Assess charges and fees to members in accordance 
21 with board resolution; 
22  (13) Hold membership in and pay dues to associations 
23 and organizations; to invest in shares, stocks or 
24 obligations of any credit union organization; 
25  (14) Declare dividends and pay interest refunds to 
26 borrowers as provided in this Act; 
 
 
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1  (15) Collect, receive and disburse monies in 
2 connection with providing negotiable checks, money orders 
3 and other money-type instruments, and for such other 
4 purposes as may provide benefit or convenience to its 
5 members, and charge a reasonable fee for such services; 
6  (16) Act as fiscal agent for and receive deposits from 
7 the federal government, this State, or any other state, 
8 state or any agency or political subdivision thereof, 
9 including, but not limited to, political subdivisions as 
10 defined in subsection (b) of Section 59; 
11  (17) Receive savings from nonmembers in the form of 
12 shares or share accounts in the case of credit unions 
13 serving predominantly low-income members. The term "low 
14 income members" shall mean those members who make less 
15 than 80% of the average for all wage earners as 
16 established by the Bureau of Labor Statistics or those 
17 members whose annual household income falls at or below 
18 80% of the median household income for the nation as 
19 established by the Census Bureau. The term "predominantly" 
20 is defined as a simple majority; 
21  (18) Establish, maintain, and operate terminals as 
22 authorized by the Electronic Fund Transfer Act; 
23  (19) Subject to Article XLIV of the Illinois Insurance 
24 Code, act as the agent for any fire, life, or other 
25 insurance company authorized by the State of Illinois, by 
26 soliciting and selling insurance and collecting premiums 
 
 
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1 on policies issued by such company; and may receive for 
2 services so rendered such fees or commissions as may be 
3 agreed upon between the said credit union and the 
4 insurance company for which it may act as agent; provided, 
5 however, that no such credit union shall in any case 
6 assume or guarantee the payment of any premium on 
7 insurance policies issued through its agency by its 
8 principal; and provided further, that the credit union 
9 shall not guarantee the truth of any statement made by an 
10 assured in filing his application for insurance; and
11  (20) Make reasonable contributions to civic, 
12 charitable, or service organizations not organized for 
13 profit; religious corporations; and fundraisers benefiting 
14 persons in the credit union's service area. 
15(Source: P.A. 97-133, eff. 1-1-12.)

16 (205 ILCS 305/39) (from Ch. 17, par. 4440)
17 Sec. 39. Special purpose share accounts; charitable 
18donation accounts. 
19 (1) If provided for in and consistent with the bylaws, 
20Christmas clubs, vacation clubs and other special purpose 
21share accounts may be established and offered under conditions 
22and restrictions established by the board of directors.
23 (2) Pursuant to a policy adopted by the board of 
24directors, which may be amended from time to time, a credit 
25union may establish one or more charitable donation accounts. 
 
 
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1The investments and purchases to fund a charitable donation 
2account are not subject to the investment limitations of this 
3Act, provided the charitable donation account is structured in 
4accordance with this Act. At their time of purchase, the book 
5value of the investments in all charitable donation accounts, 
6in the aggregate, shall not exceed 5% of the credit union's net 
7worth.
8  (a) If a credit union chooses to establish a 
9 charitable donation account using a trust vehicle, the 
10 trustee must be an entity regulated by the Office of the 
11 Comptroller of the Currency, the U.S. Securities and 
12 Exchange Commission, another federal regulatory agency, or 
13 a State financial regulatory agency. A regulated trustee 
14 or other person who is authorized to make investment 
15 decisions for a charitable donation account, other than 
16 the credit union itself, shall either be registered with 
17 the U.S. Securities and Exchange Commission as an 
18 investment advisor or regulated by the Office of the 
19 Comptroller of the Currency.
20  (b) The parties to the charitable donation account 
21 must document the terms and conditions controlling the 
22 account in a written operating agreement, trust agreement, 
23 or similar instrument. The terms of the agreement shall be 
24 consistent with the requirements and conditions set forth 
25 in this Section. The agreement, if applicable, and 
26 policies must document the investment strategies of the 
 
 
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1 charitable donation account trustee or other manager in 
2 administering the charitable donation account and provide 
3 for the accounting of all aspects of the account, 
4 including its distributions and liquidation, in accordance 
5 with generally accepted accounting principles.
6  (c) A credit union's charitable donation account 
7 agreement, if applicable, and policies shall provide that 
8 the charitable organization or non-profit entity 
9 recipients of any charitable donation account funds must 
10 be identified in the policy and be exempt from taxation 
11 under Section 501(c)(3) or Section 501(c)(19) of the 
12 Internal Revenue Code.
13  (d) Upon termination of a charitable donation account, 
14 the credit union may receive a distribution of the 
15 remaining assets in cash, or a distribution in kind of the 
16 remaining assets, but only if those assets are permissible 
17 investments for credit unions pursuant to this Act. 
18 (3) Pursuant to subsection (20) of Section 13 authorizing 
19a credit union to make reasonable contributions to civic, 
20charitable, service, or religious corporations and to avoid 
21the cost, administrative expenses, and reporting requirements 
22associated with establishing its own private foundation, a 
23credit union may establish one or more donor-advised fund 
24accounts. The credit union shall maintain the account on its 
25books and records under a name it selects, which may identify 
26the account as a charitable or grant fund or other name that 
 
 
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1reflects the charitable nature of the account. The account 
2shall be subject to the terms and restrictions set forth in 
3this subsection.
4  (a) Transfers from a donor-advised fund account shall 
5 be limited to foundations exempt from taxation under 
6 Section 501(c)(3) of the Internal Revenue Code.
7  (b) Distributions by a foundation receiving 
8 donor-advised funds from the credit union shall be:
9   (i) based upon specific grant recommendations of 
10 the credit union; and 
11   (ii) limited to public charities exempt from 
12 taxation under Section 501(c)(3) of the Internal 
13 Revenue Code.
14  (c) Transfers by a credit union from its donor-advised 
15 fund account to a foundation irrevocably conveys all 
16 right, title, and interest in the funds to the foundation, 
17 subject only to the continuing right of the credit union 
18 to designate the entity or entities that will receive the 
19 grant funds. Grants may not be used to satisfy any 
20 obligation of the credit union and no goods or services 
21 may be received by the credit union from the recipient 
22 organization in consideration of the grant. 
23(Source: P.A. 102-774, eff. 5-13-22.)

24 (205 ILCS 305/59) (from Ch. 17, par. 4460)
25 Sec. 59. Investment of funds.  
 
 
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1 (a) Funds not used in loans to members may be invested, 
2pursuant to subsection (7) of Section 30 of this Act, and 
3subject to Departmental rules and regulations: 
4  (1) In securities, obligations or other instruments of 
5 or issued by or fully guaranteed as to principal and 
6 interest by the United States of America or any agency 
7 thereof or in any trust or trusts established for 
8 investing directly or collectively in the same; 
9  (2) In obligations of any state of the United States, 
10 the District of Columbia, the Commonwealth of Puerto Rico, 
11 and the several territories organized by Congress, or any 
12 political subdivision thereof; however, a credit union may 
13 not invest more than 10% of its unimpaired capital and 
14 surplus in the obligations of one issuer, exclusive of 
15 general obligations of the issuer, and investments in 
16 municipal securities must be limited to securities rated 
17 in one of the 4 highest rating investment grades by a 
18 nationally recognized statistical rating organization; 
19  (3) In certificates of deposit or passbook type 
20 accounts issued by a state or national bank, mutual 
21 savings bank or savings and loan association; provided 
22 that such institutions have their accounts insured by the 
23 Federal Deposit Insurance Corporation or the Federal 
24 Savings and Loan Insurance Corporation; but provided, 
25 further, that a credit union's investment in an account in 
26 any one institution may exceed the insured limit on 
 
 
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1 accounts; 
2  (4) In shares, classes of shares or share certificates 
3 of other credit unions, including, but not limited to, 
4 corporate credit unions; provided that such credit unions 
5 have their members' accounts insured by the NCUA or other 
6 approved insurers, and that if the members' accounts are 
7 so insured, a credit union's investment may exceed the 
8 insured limit on accounts; 
9  (5) In shares of a cooperative society organized under 
10 the laws of this State or the laws of the United States in 
11 the total amount not exceeding 10% of the unimpaired 
12 capital and surplus of the credit union; provided that 
13 such investment shall first be approved by the Department; 
14  (6) In obligations of the State of Israel, or 
15 obligations fully guaranteed by the State of Israel as to 
16 payment of principal and interest; 
17  (7) In shares, stocks or obligations of other 
18 financial institutions in the total amount not exceeding 
19 5% of the unimpaired capital and surplus of the credit 
20 union; 
21  (8) In federal funds and bankers' acceptances; 
22  (9) In shares or stocks of Credit Union Service 
23 Organizations in the total amount not exceeding the 
24 greater of 6% of the unimpaired capital and surplus of the 
25 credit union or the amount authorized for federal credit 
26 unions; 
 
 
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1  (10) In corporate bonds identified as investment grade 
2 by at least one nationally recognized statistical rating 
3 organization, provided that: 
4   (i) the board of directors has established a 
5 written policy that addresses corporate bond 
6 investment procedures and how the credit union will 
7 manage credit risk, interest rate risk, liquidity 
8 risk, and concentration risk; and
9   (ii) the credit union has documented in its 
10 records that a credit analysis of a particular 
11 investment and the issuing entity was conducted by the 
12 credit union, a third party on behalf of the credit 
13 union qualified by education or experience to assess 
14 the risk characteristics of corporate bonds, or a 
15 nationally recognized statistical rating agency before 
16 purchasing the investment and the analysis is updated 
17 at least annually for as long as it holds the 
18 investment; 
19  (11) To aid in the credit union's management of its 
20 assets, liabilities, and liquidity in the purchase of an 
21 investment interest in a pool of loans, in whole or in part 
22 and without regard to the membership of the borrowers, 
23 from other depository institutions and financial type 
24 institutions, including mortgage banks, finance companies, 
25 insurance companies, and other loan sellers in the total 
26 amount not exceeding 150% of the net worth of the credit 
 
 
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1 union, so long as the credit union has received a 
2 composite rating of 1 or 2 under the CAMELS supervisory 
3 rating system at the time of the purchase of the 
4 investment interest. The limit is increased to 175% of the 
5 net worth of the credit union if it has received a 
6 management rating of 1 under the CAMELS supervisory rating 
7 system at the time of the purchase of the investment 
8 interest. A credit union that satisfies the criteria for 
9 the 175% limit may request approval from the Secretary for 
10 an exception to the 175% limit up to a limit of 200% of the 
11 net worth of the credit union, subject to such safety and 
12 soundness standards, limitations, and qualifications as 
13 the Department may establish by rule or guidance from time 
14 to time; 
15  (12) To aid in the credit union's management of its 
16 assets, liabilities, and liquidity by receiving funds from 
17 another financial institution as evidenced by certificates 
18 of deposit, share certificates, or other classes of shares 
19 issued by the credit union to the financial institution;
20  (13) In the purchase and assumption of assets held by 
21 other financial institutions, with approval of the 
22 Secretary and subject to any safety and soundness 
23 standards, limitations, and qualifications as the 
24 Department may establish by rule or guidance from time to 
25 time; 
26  (14) In the shares, stocks, or obligations of 
 
 
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1 community development financial institutions as defined in 
2 regulations issued by the U.S. Department of the Treasury 
3 and minority depository institutions as defined by the 
4 National Credit Union Administration; however the 
5 aggregate amount of all such investments shall not at any 
6 time exceed 5% of the paid-in and unimpaired capital and 
7 surplus of the credit union; and 
8  (15)(A) In shares, stocks, or member units of 
9 financial technology companies in the total amount not 
10 exceeding 2.5% of the net worth of the credit union, so 
11 long as: 
12   (i) the credit union would remain well capitalized 
13 as defined by 12 CFR 702.102 if the credit union 
14 reduced its net worth by the full investment amount at 
15 the time the investment is made or at any point during 
16 the time the investment is held by the credit union;
17   (ii) the credit union and the financial technology 
18 company are operated in a manner that demonstrates to 
19 the public the separate corporate existence of the 
20 credit union and financial technology company; and
21   (iii) the credit union has received a composite 
22 rating of 1 or 2 under the CAMELS supervisory rating 
23 system. 
24  (B) The investment limit in subparagraph (A) of this 
25 paragraph (15) is increased to 5% of the net worth of the 
26 credit union if it has received a management rating of 1 
 
 
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1 under the CAMELS supervisory rating system at the time a 
2 specific investment is made and at all times during the 
3 term of the investment. A credit union that satisfies the 
4 criteria in subparagraph (A) of this paragraph (15) and 
5 this subparagraph may request approval from the Secretary 
6 for an exception to the 5% limit up to a limit of 10% of 
7 the net worth of the credit union, subject to such safety 
8 and soundness standards, limitations, and qualifications 
9 as the Department may establish by rule or guidance from 
10 time to time. The request shall be in writing and 
11 substantiate the need for the higher limit, describe the 
12 credit union's record of investment activity, and include 
13 financial statements reflecting a sound fiscal history. 
14  (C) Before investing in a financial technology 
15 company, the credit union shall obtain a written legal 
16 opinion as to whether the financial technology company is 
17 established in a manner that will limit potential exposure 
18 of the credit union to no more than the loss of funds 
19 invested in the financial technology company and the legal 
20 opinion shall:
21   (i) address factors that have led courts to 
22 "pierce the corporate veil", such as inadequate 
23 capitalization, lack of separate corporate identity, 
24 common boards of directors and employees, control of 
25 one entity over another, and lack of separate books 
26 and records; and
 
 
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1   (ii) be provided by independent legal counsel of 
2 the credit union.
3  (D) Before investing in the financial technology 
4 company, the credit union shall enter into a written 
5 investment agreement with the financial technology company 
6 and the agreement shall contain the following clauses:
7   (i) the financial technology company will: (I) 
8 provide the Department with access to the books and 
9 records of the financial technology company relating 
10 to the investment made by the credit union, with the 
11 costs of examining those records borne by the credit 
12 union in accordance with the per diem rate established 
13 by the Department by rule; (II) follow generally 
14 accepted accounting principles; and (III) provide the 
15 credit union with its financial statements on at least 
16 a quarterly basis and certified public accountant 
17 audited financial statements on an annual basis; and
18   (ii) the financial technology company and credit 
19 union agree to terminate their contractual 
20 relationship: (I) upon 90 days' written notice to the 
21 parties by the Secretary that the safety and soundness 
22 of the credit union is threatened pursuant to the 
23 Department's cease and desist and suspension authority 
24 in Sections 8 and 61; (II) upon 30 days' written notice 
25 to the parties if the credit union's net worth ratio 
26 falls below the level that classifies it as well 
 
 
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1 capitalized as defined by 12 CFR 702.102; and (III) 
2 immediately upon the parties' receipt of written 
3 notice from the Secretary when the Secretary 
4 reasonably concludes, based upon specific facts set 
5 forth in the notice to the parties, that the credit 
6 union will suffer immediate, substantial, and 
7 irreparable injury or loss if it remains a party to the 
8 investment agreement.
9  (E) The termination of the investment agreement 
10 between the financial technology company and credit union 
11 shall in no way operate to relieve the financial 
12 technology company from repaying the investment or other 
13 obligation due and owing the credit union at the time of 
14 termination.
15  (F) Any financial technology company in which a credit 
16 union invests pursuant to this paragraph (15) that 
17 directly or indirectly originates, purchases, facilitates, 
18 brokers, or services loans to consumers in Illinois shall 
19 not charge an interest rate that exceeds the applicable 
20 maximum rate established by the Board of the National 
21 Credit Union Administration pursuant to 12 CFR 
22 701.21(c)(7)(iii)-(iv). The maximum interest rate 
23 described in this subparagraph that may be charged by a 
24 financial technology company applies to all consumer loans 
25 and consumer credit products; and . 
26  (16) In derivatives transactions, to aid in the credit 
 
 
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1 union's management of interest rate risk. Before entering 
2 into a derivatives transaction, and at all times during 
3 its management of a derivatives transactions program, a 
4 credit union shall satisfy and comply with all the 
5 requirements set forth in 12 CFR 703.101 et seq. All 
6 definitional terms and operational standards shall have 
7 the meanings given to them in 12 CFR 703.101 et seq., 
8 except references to federal credit unions shall be 
9 construed to mean Illinois-chartered credit unions, and 
10 references to the National Credit Union Administration and 
11 Regional Director shall be respectfully construed to mean 
12 the Department and the Secretary. A credit union with 
13 assets of at least $500 million and a CAMELS management 
14 component rating of 1 or 2 need not obtain prior approval 
15 from the Department before engaging in derivative 
16 transactions
  but shall notify the Secretary in writing or 
17 by electronic mail within 5 business days after entering 
18 into its first derivatives transaction. 
19 (b) As used in this Section: 
20 "Political subdivision" includes, but is not limited to, 
21counties, townships, cities, villages, incorporated towns, 
22school districts, educational service regions, special road 
23districts, public water supply districts, fire protection 
24districts, drainage districts, levee districts, sewer 
25districts, housing authorities, park districts, and any 
26agency, corporation, or instrumentality of a state or its 
 
 
HB5372- 34 -LRB103 39216 RTM 69366 b


1political subdivisions, whether now or hereafter created and 
2whether herein specifically mentioned or not.
3 "Financial institution" includes any bank, savings bank, 
4savings and loan association, or credit union established 
5under the laws of the United States, this State, or any other 
6state. 
7 "Financial technology company" includes any corporation, 
8partnership, limited liability company, or other entity 
9organized under the laws of Illinois, another state, or the 
10United States of America: 
11  (1) that the principal business of which is the 
12 provision of financial products or financial services, or 
13 both, that:
14   (i) currently relate or may prospectively relate 
15 to the daily operations of credit unions;
16   (ii) are of current or prospective benefit to the 
17 members of credit unions; or
18   (iii) are of current or prospective benefit to 
19 consumers eligible for membership in credit unions; 
20 and
21  (2) that applies technological interventions, 
22 including, without limitation, specialized software or 
23 algorithm processes, products, or solutions, to improve 
24 and automate the delivery and use of those financial 
25 products or financial services. 
26 (c) A credit union investing to fund an employee benefit 
 
 
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1plan obligation is not subject to the investment limitations 
2of this Act and this Section and may purchase an investment 
3that would otherwise be impermissible if the investment is 
4directly related to the credit union's obligation under the 
5employee benefit plan and the credit union holds the 
6investment only for so long as it has an actual or potential 
7obligation under the employee benefit plan. 
8 (d) If a credit union acquires loans from another 
9financial institution or financial-type institution pursuant 
10to this Section, the credit union shall be authorized to 
11provide loan servicing and collection services in connection 
12with those loans. 
13(Source: P.A. 102-496, eff. 8-20-21; 102-774, eff. 5-13-22; 
14102-858, eff. 5-13-22; 103-154, eff. 6-30-23.)