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This opinion was issued in the third quarter of 1998.
Mass. Gen. Laws chapter 168, section 19 limits a state-chartered savings bank's ability to make residential first mortgage loans by prohibiting a state-chartered savings bank from giving a preferential rate of interest or terms on loans or extensions of credit to an officer, trustee, or director of the bank; this statute is silent as to employees. The Division of Banks Regulatory Bulletin 2.1-102 seeks to clarify the provisions of the General Laws governing loans to insiders and the applicable federal provisions found in Regulation O. Section III A1 of the Bulletin states that the more stringent or restrictive legal provision will control. Comparable federal provisions appear to permit banks to provide compensation or benefit programs to all employees so long as insiders, such as officers, directors or trustees, are not given preferential terms and conditions over the other employees.
Because the state provision of M.G.L. c. 168 §19 is more restrictive than the federal provisions, it must prevail. It is the Division's position that a bank may offer an employee benefits program giving mortgages with better terms or reduced fees/points to employees and those officers of the bank who are not directors and who are not covered by the definition of officer provided by said section 19.