Governor Signs CBAI Mortgage Act Clarification Bill
The Governor signed HB 2699, a CBAI initiative into law. The legislation, now Public Act 101-0097 , clarifies the Illinois Mortgage Act by making two specific changes. It streamlines the mortgage release process by clarifying the ability to delegate the authority to request a mortgage release letter. It also clarifies that a “month” as defined in the law means a standard 30 days and not the specific number of days in a specific month. CBAI would like to thank Rep. Mark Walker (D-Arlington Heights) and Sen. Laura Murphy (D-Des Plaines) for their dedicated sponsorship.

The need for this legislative change was brought to us by a member bank through Legal Link, a free service available to all CBAI members. As always, the Governmental Relations Department is not only open to but welcomes any legislative ideas and suggestions. We look forward to hearing from you!
IDFPR Issues Industrial Hemp Guidance
The Illinois Department of Financial and Professional Regulation, Division of Banking has issues guidance on industrial hemp.  Please click here to view IDFPR’s guidance .   The document should help clear up questions about the legal difference between industrial hemp, as defined in the 2018 Farm Bill, and cannabis. It also gives insight into how state banking examiners will approach the issue:

From IDFPR Guidance;
DOB examiners will continue to evaluate compliance with BSA/AML laws during regular safety and soundness examinations of state-chartered banks and savings banks. DOB considers state-chartered banks or savings banks’ obligations under BSA/AML for hemp customers satisfied if the institution:
  • Continues compliance with existing BSA/AML statutes.
  • Implements an effective Customer Identification Program (CIP).
  • Employs reasonable and effective enhanced due diligence procedures.
  • Files Suspicious Activity Reports (SAR) when appropriate (for example, if a crop exceeds the legal limit of 0.3% THC).
The guidance also recommends that banks confirm with the Illinois Department of Agriculture that the growers or processors of industrial hemp are properly licensed under state law. Unfortunately, the Department of Ag does not currently make that information publicly available. CBAI members can view a list of all registered growers and processors, as well as additional guidance from the governmental relations team, in the members only section of the CBAI website. Please click here to access CBAI's members only section.
Municipal Pension Consolidation
Earlier this year Governor JB Pritzker formed a task force to consider the benefits and risks of municipal pension consolidation. Illinois currently has over 350 police pension systems and nearly 300 fire pension systems under local control. The task force is charged with exploring a proposal made by the Illinois Municipal League (IML), who represents units of local government, to consolidate pension systems. IML contends that consolidation will bring administrative cost savings and potentially help the new larger funds compete for better returns on investments. Currently many of the existing pension systems are managed in partnership with community banks. CBAI is concerned that consolidation will eliminate much of that local investment and eliminate local control over the systems. We have engaged the Governor’s Office and the task force to share community bankers’ concerns.  Please click here to view the formal letter CBAI sent to the Governor outlining many of our concerns .  CBAI has asked the task force to consider the issues raised by community bankers in their final report. Governor Pritzker has indicated publicly that he supports the concept of municipal pension consolidation. CBAI will continue working to ensure that members of the General Assembly factor the potential impact on community banking into any decisions they may make on the issue.
Notes from Springfield
There has been some legislative turnover at the Capitol this summer, which is somewhat unusual given that it is not an election year.

Former Sen. John Mulroe, a Chicago Democrat stepped down earlier this summer after his appointment as a Cook County judge. Mulroe, chair of the Senate Judicial Committee, was a well-respected legislator and friend to community banking. Rob Martwick, a Chicago Democrat who’s served in the House since 2013 was sworn in as the new state senator taking Mulroe’s seat. Lindsey LaPointe was appointed to fill the 19 th District seat vacated by Martwick.

After 23 years, Mike McAuliffe, the lone Republican member of the General Assembly representing a portion of the City of Chicago, announced he was resigning from the House to spend more time with his young family. His father Roger McAuliffe held the seat for 23 years before that. Rosemont Mayor Brad Stephens was tapped as his replacement.

Senator Sue Rezin (R) of the 38th District will run for the congressional seat in the 14th District. Naperville Democrat Lauren Underwood (D) defeated longtime Congressman Randy Hultgren last year and is expected to run for reelection. Rezin is the midst of a four-year Senate term. If she fails to win the Congressional election, she will continue serving as a state senator.

Representative Darren Bailey (R) of the 109 th District will run for the State Senate seat now held by Senator Dale Righter (R) in 2020. Righter announced in May that he will not run for reelection. Bailey is serving his first term in the House after defeating Republican David Reis in the 2018 primary. Reis stated he will not run for election again. 

State Representative Margo McDermed (R-Mokena) announced that she will not seek reelection in November 2020.
CBAI’s Jerry Peck and David Manning were invited to join Governor JB Pritzker for a bill signing ceremony for HB 88 the Consumer Fairness Act. CBAI negotiated with legislators and legal advocates for two years to work out the details of the legislation. The new law lowers the post-judgement interest rate on consumer debt from 9% to 5% and limits the period for revival of judgements. The measure passed unanimously through the House and Senate.
On the Federal Side

Credit Union Abuse, the Federal Reserve's Role in Real-Time Payments and Additional Regulatory Relief for Community Banks Top the Agenda During Capitol Hill Meetings
CBAI’s SVP Federal Governmental Relations, David Schroeder, was in Washington D.C. for his quarterly visit the week of July 15. Schroeder informed the Illinois Congressional Delegation about important issues for Illinois community banks and also met with the Consumer Financial Protection Bureau and senior staff of the Independent Community Bankers of America (ICBA).

At the beginning of each Hill meeting, Schroeder raised the issue of credit union abuse, particularly the acquisition of tax paying community banks by tax-exempt credit unions. These acquisitions are just the latest example of credit unions straying far from their founding mission of serving individuals of modest means and with a common bond. Schroeder highlighted a new report from  Federal Financial Analytics , stating that credit unions are increasingly serving middle- and upper-income households, have figured prominently in reports of predatory lending and benefit from less stringent safety and soundness regulations. Credit unions can’t have it both ways and there must be consequences for their actions. Please click here to respond to the latest CBAI Action Alert urging a Congressional investigation into credit union abuse.

CBAI updated the Illinois Delegation about the status of the Federal Reserve‘s deliberation on its role in real-time payments. It is critically important for the Fed to be a real-time payments operator, regulator and host the payments directory to assure that community banks will have fair and equal access to an improved payments system. We cannot let the largest banks represented by The Clearing House (TCH) to have a monopoly on real time payments – nothing good will come of that. The Fed along with the TCH should share this responsibility (as they do now in the payments system) to provide choice, competition, checks and balances, innovation, security and redundancy which will assure access and fair treatment for all of the system participants including community banks, consumers, small business and agriculture. Please click here to respond to the latest CBAI Action Alert supporting the Fed’s role in real-time payments.

CBAI also urged the swift completion of the remaining sections of the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) and urged Illinois Members of Congress to co-sponsor legislation which will provide additional regulatory relief for community banks.

H.R. 2513 – Corporate Transparency Act of 2019 – This legislation provides a more effective means of collecting and coordinating the use of information to prevent criminal activity by requiring corporations and limited liability companies to provide “beneficial ownership” information to the Financial Crimes Enforcement Network (FinCEN) – not community banks for which it would represent an unreasonable regulatory burden.

H.R. 1595 / S. 1200 – SAFE Banking Act of 2019 – This legislation provides a public safety benefit by granting a safe harbor from federal sanctions and would apply to financial institutions and ancillary companies that serve cannabis-related businesses in states where cannabis is legal. The bill would apply solely to states that have legalized cannabis for medical or recreational use.

S. 1233 – Community Bank Access to Capital – This legislation helps banks raise much-needed capital by exempting publicly held community banks with less than $5 billion in assets from the Sarbanes-Oxley Act’s internal control attestation requirements, exempt community banks with less than $5 billion in assets from the FDIC’s annual report on financial condition and management, and revise the SEC definitions of “accredited” and “non-accredited” investors to attract new investors.

H.R. 1872 / S.1641 – Enhancing Credit Opportunities in Rural America Act of 2019 (ECORA) – This legislation provides that interest earned on loans secured by agricultural real estate would not be taxable and also provides similar relief on loans secured by rural single family homes that are the principal residence of the borrower in towns with a population of less than 2,500. This legislation gives lenders more flexibility to work with farmers, ranchers and rural homeowners, as well as helping to level the competitive playing field for community banks by providing similar tax benefits which are already enjoyed by other lenders in rural communities.
Join Us for a Legislative Roundtable and Sporting Clay Shoot in Sparta
You’re invited to join Southern Illinois lawmakers, the CBAI governmental relations team, and fellow community bankers for a legislative roundtable at the World Shooting Complex in Sparta Illinois. This is an opportunity to meet directly with lawmakers and discuss key issues affecting the community banking profession. Following the meeting, those interested are invited to join us for an afternoon on the sporting clay course. This is a casual event designed to promote networking and relationship building, shooters of all experience levels are welcome. The event is free and open to all CBAI members.  Please click here for more information.
For more information, or if you have any questions or comments, please contact Jerry Peck or Megan Peck at 800/736-2224.