Gov. Bruce Rauner has signed a banking bill into law that originated with 71st District State Rep. Tony McCombie, R-Savanna.
Not only is it being hailed as a win for smaller banks, it’s a win for McCombie. It’s the first bill she took the distance, from drafting the language to seeing it signed.
The bill amends the state’s Savings Bank Act to remove an annual audit requirement for savings banks. The smaller banks will now be able to wait 18 months to have their books looked at, and they will be examined in the same way as other state banks.
The legislation was the result of discussions between McCombie and Savanna Savings Bank, which last year told McCombie that the extra audit was an outdated and costly rule.
“This removes the annual audit entirely,” said Steve McIntyre, CEO of Savanna Savings Bank. “This had already been eliminated in other states because the state and FDIC are already examining the books.”
Smaller banks can pay hundreds of thousands of dollars to bring in an independent auditor.
Among the supporters of the bill were the Illinois Bankers Association, Community Bankers Association and the League of Financial Institutions, hailing it as a way to level the playing field and reduce costly red tape for smaller banks.
The Illinois Department of Financial and Professional Regulation went neutral on the bill after its concerns were addressed through the bill amendment process.
The state regulators had been opposed to the bill because they thought it went too far, but changed their stance when the language was changed to focus solely on the audit provision.
“The department didn’t want to lose other authority in the savings bank law, but it’s OK with the removal of the audit provision because commercial banks do not contain a statutory audit provision,” said Eric Eizinger, director of policy and community relations at the IDFPR.
The regulators will continue to examine savings banks and IDFPR retains the authority to request that an audit be done if it is deemed necessary.
Rauner signed the bill July 31, and it became effective immediately.
There are signs that bank regulations are also beginning to ease on the federal front. In May, Senate Bill 2155 was signed into law, bringing changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank became law in 2010, aimed at increasing transparency in the wake of the global financial meltdown that triggered a long recession.
While well-intentioned, the extra costs of Dodd-Frank’s regulatory layers have driven many community banks out of business.
Banks are still waiting to see how the amendments are instituted, but a key component is backing up federal banks’ exam schedules to 18 months.