| Date: | 01/01/1999 |
|---|---|
| Organization: | Division of Banks |
| Docket Number: | 99-275 |
This opinion was issued in the first quarter of 1999.
- This page, Summary of Selected Opinion 98-275, is offered by
- Division of Banks
Opinion
Opinion Summary of Selected Opinion 98-275
Table of Contents
Summary of Selected Opinion 98-275
A credit union seeks a determination regarding a decision not to grant loans to employees made on the basis of the small size and limited staff, which may present problems involving objective loan decisions, payroll confidentiality and internal control issues. Mass. Gen. Law chapter 171 does not contain a provision granting automatic credit union membership to employees of a credit union. Regulatory Bulletin 4.1-104 provides that membership in a credit union cannot be extended or made available to employees of the credit union who are otherwise not eligible for membership. Accordingly, in the absence of a specific by-law provision governing employee membership, an employee seeking to become a member of the credit union must meet the eligibility requirements for membership. It is the Division's position that a prohibition on lending to employees who are bona fide members of the credit union is not permissible. Such a prohibition would improperly establish a classification of members who are not eligible for loans.