For the seventh year consecutive year, thanks to the actions of the Illinois Credit Union League (ICUL), Illinois state-chartered credit unions are once again entitled to a regulatory fee credit.
In a case initiated by ICUL in 2004, the regulatory fee escalation and sweep scheme established by former Gov. Rod Blagojevich was challenged. The scheme raised regulatory fees assessed credit unions and banks far in excess of the amount required for their regulatory supervision. It then transferred the excess to the general revenue fund to cover unrelated costs of state government.
The banking groups joined with the league in the suit against the State, since they were similarly impacted. It took 4 years to negotiate a fair settlement of the claims and then required legislation to implement the court-approved settlement. Under the terms of the settlement, Illinois-chartered credit unions received a cash payment of more than $6.2 million in June, 2009. The legislation implementing the settlement also reduced the Credit Union Fund margin that triggers a credit back to credit unions on their fees and codified a going forward rate reduction in regulatory fees. Those elements are the basis for the regulatory fee credits and rate reduction savings credit unions receive on an annual basis.
“We believe the prosecution and favorable settlement of the regulatory fee case is an excellent example of the value of League affiliation,” said ICUL Executive Vice President, General Counsel and Chief Operating Officer Stephen Olson. “We are particularly pleased the settlement terms we negotiated with the State in 2008 continue to provide state-chartered credit unions with a financial benefit.”
The aggregate amount of the 2016 regulatory fee credit is $783,305, which represents approximately 64% of the total 2016 4th quarter billing to credit unions for regulatory fees. Accordingly, credit unions will enjoy a partial, but substantial, 4th quarter fee holiday. Additionally, for fiscal year 2016, the rate reduction savings was $931,922. To date, the settlement has returned over $18.5 million to Illinois credit unions.
“It was not an easy decision for the league to pursue litigation against the state in 2004, but the financial impact of winning this case has been tremendous for state-chartered credit unions over the past 7 years,” said ICUL President Tom Kane. “Without the efforts of the League, Illinois credit unions might still be stuck in a cycle of overpayment and sweeps into the general fund.”