SPRINGFIELD, Ill.–In a proposal that would also affect the state’s credit unions, the Illinois Department of Financial and Professional Regulation (IDFPR) has issued a notice of proposed rules to implement the newly passed Illinois Community Reinvestment Act (ILCRA).
The proposal includes a separate set of rules applicable to state-chartered banks, non-depository mortgage lenders, and credit unions. Each set of proposed rules address topics that include, among other things, performance tests and ratings by institution size or business model, assessment area delineation, data collection and reporting, and examination procedures, according to JDSupra.
“The proposal outlines CRA responsibilities and performance evaluation measures for banks and would subject them to a CRA examination by the IDFPR, in addition to their federal CRA examinations. The rules themselves, however, are essentially the same as under the federal CRA,” according to JDSUpra. “Under the ILCRA, non-depository mortgage lenders and credit unions are subject to CRA requirements. As described in the proposal, credit unions and non-depository mortgage lenders would be subject to a CRA evaluation based on a testing framework that looks similar to the current federal CRA framework, meaning that the IDFPR will examine these institutions under tests that look similar to the current federal CRA tests depending on their operations and asset sizes.”
Effects on Credit Unions
The JDSupra analysis said the proposal’s requirements for Illinois-chartered credit unions look comparable to those for banks under the current federal CRA.
“Akin to banks, credit unions would have CRA responsibilities in delineated assessment areas, which are communities based on where credit unions have their main offices, branches, and deposit-taking ATMs,” JDSupra said. “These responsibilities take the form of lending, investment, and service tests based on asset size thresholds and then add resultant evaluation elections depending on asset size. Additionally, the proposal provides an alternative evaluation framework for wholesale and limited purpose credit unions, involving a community development test, and strategic plan evaluation option.
“The lending test includes home mortgage, small business, and small farm loans, though it also adds potential consumer loans, such as motor vehicle, credit card, home equity, other secured, and other unsecured loans, depending on the credit union’s loan portfolio,” the report continued. “Credit unions would also have data collection, reporting, and disclosure requirements, though those requirements are reduced for small credit unions.”
What’s Surprising?
According to JDSUpra, the proposed regulations implementing ILCRA, as applicable to Illinois-chartered banks, largely mirror the federal CRA regulations applicable to state-chartered institutions.
“But those federal CRA regulations are on the precipice of a major overhaul. As proposed by the interagency Notice of Proposed Rulemaking to the federal CRA, where a bank will have CRA responsibilities, the substance of those responsibilities, the measurement of those responsibilities, and the record keeping and reporting of those responsibilities are slated for significant change under a completely new framework,” JDSupra said. “Whether those changes will be finalized as currently proposed by the three prudential banking regulators remains to be seen, but the fact that the IDFPR’s suggested framework for bank compliance with the ILCRA is based on a likely soon-to-be outdated set of regulations is surprising. The proposal does note that the ILCRA regulations are intended to follow the federal standards. Accordingly, there could be a revision in the works sooner-than-later should the federal CRA regulations change contemporaneously with or soon after the ILCRA regulations are finalized.”
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