Predatory Loan Prevention Act

State and national banks and savings banks are exempt from the provisions of the Predatory Loan Prevention Act, which caps the annual percentage rate (APR) on consumer loans at 36%. However, the law does apply to loans made by a covered lender and purchased by a bank, such as an indirect automobile loan originated by a dealer that sells its loans to banks.

Illinois Community Reinvestment Act

We recommend posting the public notices required by the Illinois Community Reinvestment Act (Illinois CRA) as soon as possible. The law became effective immediately when it was signed by the Governor on March 23, 2021, including the public notice posting requirements for the offices and websites of Illinois-chartered banks and other covered entities.

Unfortunately, we have little information on the expected examination schedules or other details of the Illinois CRA. The law assigns rulemaking authority to the Illinois Department of Financial and Professional Regulation (IDFPR) on several issues, including the scheduling and conduct of examinations. The law also allows the IDFPR to enter into cooperative agreements with the FDIC and other federal regulators, and it references “joint examinations,” but any details on the scheduling of examinations and partnering with the federal banking regulators is left to the IDFPR’s eventual rulemaking. To date, the IDFPR has issued no information on its rulemaking process or plans, and the IBA will continue monitoring for and communicating any developments.

As to training, we will be discussing the Illinois CRA at our upcoming virtual Compliance Conference on May 14. At this point much of the substance of the law is unknown, with the details left to the IDFPR’s administrative rules. But once those administrative rules are published, we plan to provide more training to assist our members in preparing for Illinois CRA examinations.

For resources related to our guidance, please see:

• Predatory Loan Prevention Act, 815 ILCS 123/15-1-5(c) [Public Act 101-658] (“Banks, savings banks, savings and loan associations, credit unions, and insurance companies organized, chartered, or holding a certificate of authority to do business under the laws of this State or any other state or under the laws of the United States are exempt from the provisions of this Act.”)

• Predatory Loan Prevention Act, 815 ILCS 123/15-1-10 [Public Act 101-658] (“‘Lender’ means any person or entity, including any affiliate or subsidiary of a lender, that offers or makes a loan, buys a whole or partial interest in a loan, arranges a loan for a third party, or acts as an agent for a third party in making a loan, regardless of whether approval, acceptance, or ratification by the third party is necessary to create a legal obligation for the third party, and includes any other person or entity if the Department determines that the person or entity is engaged in a transaction that is in substance a disguised loan or a subterfuge for the purpose of avoiding this Act.”)

• Predatory Loan Prevention Act, 815 ILCS 123/15-1-10 [Public Act 101-658] (“‘Loan’ means money or credit provided to a consumer in exchange for the consumer's agreement to a certain set of terms, including, but not limited to, any finance charges, interest, or other conditions. ‘Loan’ includes closed-end and open-end credit, retail installment sales contracts, motor vehicle retail installment sales contracts, and any transaction conducted via any medium whatsoever, including, but not limited to, paper, facsimile, Internet, or telephone. ‘Loan’ does not include a commercial loan.”)

• Illinois CRA, 205 ILCS 735/20 (“Each covered financial institution shall provide, in the public lobby of each of its offices, if any, and on its website, a public notice that is substantially similar to the following:

  STATE OF ILLINOIS COMMUNITY REINVESTMENT NOTICE

  The Department of Financial and Professional Regulation (Department) evaluates our performance in meeting the financial services needs of this community, including the needs of low-income to moderate-income households. The Department takes this evaluation into account when deciding on certain applications submitted by us for approval by the Department. Your involvement is encouraged. You may obtain a copy of our evaluation. You may also submit signed, written comments about our performance in meeting community financial services needs to the Department.”)
   

• Illinois CRA, 205 ILCS 735/15(a) (“The Secretary [of the IDFPR] shall have the authority to examine each covered financial institution for compliance with this Act, in consultation with State and federal regulators with an appropriate regulatory interest, for and in compliance with applicable State and federal fair lending laws, including, but not limited to, the Illinois Human Rights Act, the federal Equal Credit Opportunity Act, and the federal Home Mortgage Disclosure Act, as often as the Secretary deems necessary and proper. The Secretary may adopt rules with respect to the frequency and manner of examination including the imposition of examination fees. The Secretary shall appoint a suitable person to perform such examination. . . .”)
   
• Illinois CRA, 205 ILCS 735/25(a) (“For the purposes of this Act, the Secretary may conduct any examinations under this Act with State, other state, and federal regulators, and may enter into cooperative agreements relative to the coordination of or joint participation in any such examinations, the amount and assessment of fees therefor or enforcement actions relevant thereto, and may accept reports of examinations by such regulators under such arrangements or agreements.”)

• Illinois CRA, 205 ILCS 735/25(c) (“Any coordination or joint participation established under this Section may seek to promote efficient regulation and effect cost reductions for the Department and covered financial institutions. . . .”)