CBAI Urged CFPB to Exempt Community Banks from New Debt Collection Rules

February 18, 2014

In a recent comment letter, which was sent in response to an advanced notice of proposed rulemaking, CBAI urged the Consumer Financial Protection Bureau to recognize that community banks do not abuse consumers with unfair debt collection practices and to exempt community banks from any new debt collection rules.

Regulations already exist regarding fair debt collection practices. More rigorously enforcement of the existing rules against those who are breaking the existing rules is clearly what is needed. The CFPB should demonstrate that these rules are insufficient before proposing any new rules.

CBAI urged the Bureau to not increase the regulatory burden on community banks and unequivocally ensure that any additional debt collection regulation not “trickle down” and be applied to community banks by their prudential regulators. Read Comment Letter


Illinois Members of Congress Call on Regulators to Address the Volcker Rule Impact on Community Banks

December 23, 2013

Illinois Senator Mark Kirk and Congressmen Peter Roskam, Randy Hultgren, and Bill Foster, have called on federal banking regulators to address the impact of certain provisions of the Volcker Rule that could create severe unintended consequences for hundreds of community banks. The provisions which were recently released could require many community banks to take unanticipated losses on their holdings of collateralized debt obligations (CDOs) backed by bank-issued trust preferred securities (TruPS).

Senator Mark Kirk (R-IL) joined with Senator Joe Manchin (D-W.VA) in stating, “The purpose of the Volcker Rule was to ensure that the trading activities of the big banks do not undermine the U.S. economy and financial stability, not to punish community banks.” They went on to explain that under the Rule, “These [community] banks would be required to recognize a write-off in the current quarter for any unrealized losses from holding these securities and would be required to liquidate the security by July of 2015. If the bank was able to hold these securities until maturity, the anticipated loss would be zero.” Kirk and Manchin urged the regulators to use their authority to grant a carve-out or grandfather status to banks under a certain asset size for their ownership of these securities.

Congressman Randy Hultgren (R-14) and Bill Foster (D-11), both members of the House Financial Services Committee, expressed their deep concern for the immediate consequences of the Volcker Rule on Illinois community banks which hold these securities. Chief Deputy Whip Peter Roskam (R-6) urged that, in the interests of Illinois community financial institutions, the regulators consider potential accommodations and alternatives. He also noted that, given the time sensitive nature of this issue, regulators should give consideration to this matter as soon as possible.

CBAI thanks Senator Kirk, and Congressmen Hultgren, Foster, and Roskam for writing the banking regulators on this important issue, and for their support for Illinois community banks.


House Passes Patent-Reform Bill

December 5, 2013

The House of Representatives passed legislation to address the problem of abusive patent-infringement demands. The Innovation Act of 2013 (H.R. 3309), which passed by a vote of 321-95 includes provisions that would make it easier for community banks and other small businesses to challenge the validity of frivolous patent claims.

This legislation would help address the growth of patent-assertion entities (PAEs), which attempt to win legal settlements by claiming infringement of poor-quality business-method patents by legitimate businesses, including many community banks.

Components of the H.R. 3309 would help alter the business model of these entities by removing some of their financial incentive to assert patents of dubious quality in the hope of quick settlements. The legislation includes a provision that would allow the director of the Patent and Trademark Office to waive the costly filing fee required to initiate a transitional proceeding at the PTO that re-examines the validity of these patents. Absent a waiver, it would be cost-prohibitive for community banks to petition the PTO.



Public Act 98-209 (House Bill 1323): Will amend the Payday Loan Reform Act and the Consumer Installment Loan Act to mandate that the Illinois Department of Financial & Professional Regulation (“IDFPR”) adopt rules for civil monetary penalties (i.e., fines) including a schedule of fines, remedial measures intended to improve compliance, and standards and procedures to be followed when issuing fines. [effective date: January 1, 2014]

Public Act 98-486 (House Bill 3380): Will amend Section 2MM of Illinois’ Consumer Fraud and Deceptive Business Practices Act to allow a guardian appointed under the Probate Act or an agent with power of attorney under the Illinois Power of Attorney Act to request a security freeze on the credit report of a disabled adult; also permits a credit file security freeze to be sought on behalf of a minor by the legal guardian of a minor appointed under the Probate Act; a parent of a minor; or a guardian under the Juvenile Court Act of a minor under age 18 (or, with a court order extending the guardian’s authority, under the Juvenile Court Act for a person between ages 18 and 21). Will prohibit the temporary lifting or suspension of a credit file security freeze in the case of a minor (Section 2MM permits such temporary or transaction-specific lifts of a credit file security freeze by an adult). [effective date: January 1, 2014]

Public Act 98-498 (Senate Bill 2186): Will amend Article 4A of Illinois’ Uniform Commercial Code (the UCC Article governing electronic fund transfers) by clarifying that Section 4A-108, which otherwise defers to the federal Electronic Fund Transfer Act (“federal law”) in cases of redundancy or conflict with Illinois law, still applies in cases of remittance payments made electronically that fall outside of the federal law’s definition of “remittance transfer” (for federal law purposes the recipient of a remittance transfer must be in another country and the dollar amount of the transfer must be above a minimum amount set from time to time by regulation). [effective date: January 1, 2014]

Public Act 98-545 (Senate Bill 1829): Will amend Illinois’ Electronic Fund Transfer Act (“Illinois Act”) to introduce and define the term “general use reloadable card” as an access device not marketed as a gift card that is prepaid, permits funds to be added after its initial purchase and use, is primarily for personal, family or household use, and is redeemable at multiple unaffiliated merchants or usable at ATMs. Will add new Section 46 to the Act mandating “clear and conspicuous” disclosures that a card issuer must provide to the customer in written or electronic form. Before purchase, the issuer must disclose: the card purchase fee; any monthly maintenance fee; any fee for ATM withdrawal or cash advance at point of sale; any reloading fee; any balance inquiry fee (unless customer is advised of a phone number or Internet site at which balance can be checked at no cost); and any other fee that may be charged at the time of issuance or after issuance and, if the fee amount is variable, a description of the formula for calculating the fee and the conditions on which the fee would be imposed. Disclosures on the card must include an expiration date, if any, and a toll free phone number at which the customer can receive information about fees or request a replacement card for a card that is expiring. Compliance with federal Electronic Fund Transfer Act conditions and disclosures pertaining to general use reloadable cards shall constitute compliance with the Illinois Act. [effective date: January 1, 2014, although by its terms the law’s mandates apply to any general use reloadable card sold to a consumer after January 1, 2015]

Miscellaneous non-banking; but still good to know

Public Act 98-0063 (House Bill 0183): Created the Firearm Concealed Carry Act. Establishes the authority for “concealed carry” in Illinois, subject to numerous licensing and training requirements and subject to rulemaking under the jurisdiction of the Department of State Police. Specifies more than 20 locations where firearms are banned by law (schools, taverns, sports arenas, etc.) but also permits any business proprietor (e.g., a bank) to prohibit firearms on the premises of the business if the proprietor posts a sign at the entrance that meets signage specifications yet to be developed by the State Police; provided, that if the proprietor considers a parking area to be part of his/her/its business premises, the licensed firearms owner shall be given a reasonable amount of time to possess the firearm for the exclusive purpose of securing the firearm in his or her vehicle in that parking area. [effective date: July 9, 2013; but realistic projections are that State Police will not be prepared to begin issuing licenses until early 2014]

Public Act 98-430 (House Bill 2590): Will create a new State law titled the “Workplace Violence Prevention Act,” authorizing employers to seek an order of protection when one or more employees have been subjected to unlawful violence or there is a credible threat of unlawful violence that can be reasonably construed as threatened to occur at the employer’s place of business. [effective date: January 1, 2014]

Public Act 98-506 (House Bill 1247): Will amend Section 12-610.2 of the Illinois Vehicle Code to extend the current prohibition against text messaging while driving to also ban the use of cell phones while driving. Exempt from this prohibition are “hands-free” (including headset) and voice-operated systems; exemptions also remain for reporting an emergency situation and maintaining a conversation with emergency services personnel as well as use of a cell phone while parked on the shoulder of a roadway. First offense is punishable by a $75 fine; second offense $100 and a reportable “moving violation;” third offense $125 and a moving violation; fourth and subsequent offenses $150 and moving violation(s). [effective date: January 1, 2014]

Public Act 98-507 (House Bill 2585): Will amend the Illinois Vehicle Code to create new, enhanced classifications of vehicular crimes involving distracted driving: aggravated use of a video device if the driver has a video screen forward of the back seat and an accident causes great bodily harm, permanent disability, disfigurement or death to another; aggravated use of a wireless telephone when a driver under age 19 or driving in a school or construction zone causes great bodily harm, permanent disability, disfigurement or death to another; aggravated use of an electronic communication device if driver is texting while driving and causes great bodily harm, permanent disability, disfigurement or death to another; Class A misdemeanors for aggravated violations resulting in great bodily harm, permanent disability, or disfigurement and Class 4 felony for aggravated violations resulting in death. [effective date: January 1, 2014]

Public Act 98-511 (Senate Bill 2356): Will amend the Illinois Vehicle Code to increase rural interstate highway speed limits from 65 m.p.h. to 70 and 65 m.p.h. on divided 4 lane highways; 55 m.p.h. for all other highways. Allows the counties of Cook, DuPage, Lake, Madison, McHenry, St. Clair and Will to adopt ordinances setting lower speed limits for interstates and highways in those counties. Also will lower the floor for a Class B misdemeanor for speeds from 26 to 35 m.p.h. above the speed limit (currently, 31 to 40 over the speed limit) and for a Class A misdemeanor for speeds more than 35 (currently 40) m.p.h. above the limit. [effective date: January 1, 2014]

Public Act 98-527 (Senate Bill 1568): Will amend Section 14 of the Illinois Wage Payment and Collection Act to establish non-waivable fees payable by the employer to the State Department of Labor in cases where the employer failed to timely pay “wages, final compensation, or wage supplements” as required by the Act. The fee payable by the employer will be $250 if the amounts payable to the employee or departed employee are not more than $3,000; a fee of $500 if the amounts payable to the employee or departed employee are not more than $3,000 but less than $10,000; a fee of $1,000 if the amounts payable to the employee or departed employee are $10,000 or more. [effective date: January 1, 2014]

For further information or to obtain a copy of any of these new laws, please contact CBAI General Counsel Jerry Cavanaugh by phone (1/800-736-2224 from within Illinois) or by email (