Permissibility Of Board Member Doing Paid Legal Work For Credit Union
The Division's Regulatory Bulletin 4.1-101 governs loans and fees to credit union officers and directors and applies to any credit extension or fees paid to directors and certain credit union officers and their related interests. As to fees, the Bulletin provides in pertinent part that "a credit union shall not make any loan or extend any line of credit if, either directly or indirectly, any commission, fee or other compensation is to be received by the credit union's officials . . . in connection with underwriting, insuring, servicing, or collecting the loan or line of credit." The Bulletin definition of "official" includes a member of the board of directors. The Bulletin was designed to prohibit certain transactions with credit union insiders which promote conflicts of interest. It is the Division's position that the Bulletin prohibits a credit union from making loans if a credit union official will receive compensation in connection with the loan. The Bulletin does not allow a board member to receive legal fees services performed in connection with closing mortgage loans made by the credit union.
Additionally, regulations promulgated by the National Credit Union Administration (NCUA) contain conflict of interest provisions. Specifically, 12 CFR § 701.21(c)(8) prohibits, with exceptions, an official or employee of a federal credit union from receiving, directly or indirectly, any commission, fee, or other compensation in connection with any loan made by the credit union. Certain NCUA regulations apply to lending and other activities of state-chartered NCUA-insured credit unions pursuant to 12 CFR § 741.203 and other applicable sections.