June 9, 1998
Jan Hesalroad, President/CEO
2960 Diagonal Highway
Boulder, CO 80301
Dear Ms. Hesalroad:
You have requested a legal opinion on the permissibility of a
federal credit union (FCU) offering postage stamps to nonmembers
through ATMs. As explained below, this is not a permissible expansion
of an FCU's incidental powers.
Section 107 of the Federal Credit Union Act (the Act) states that
an FCU may engage in activities that are either expressly authorized
by the Act or, pursuant to the "incidental powers clause,"
activities that are incidental to one of the express powers.
12 U.S.C. §1757. The "incidental powers clause"
permits an FCU "to exercise such incidental powers as shall
be necessary or requisite to enable it to carry on effectively
the business for which it is incorporated." 12 U.S.C. §1757(17).
The "incidental powers" authority includes the power
to do that which is "convenient or useful" in connection
with the performance of one of the bank's established activities
pursuant to its express powers under the National Bank Act."
Arnold Tours, Inc. v. Camp, 472 F. 2d 427 (1st
Cir. 1972); See also American Bankers Association
v. Connell, 447 F. Supp. 296 (D.D.C. 1978)(made the "convenient
and useful" test of Arnold Tours applicable to FCUs).
Under both federal statute and case law, an FCU may own, operate
and provide ATM services to its members as a "convenient
and useful" activity in connection with the performance of
express powers such as lending and receiving payments on shares.
We have also allowed FCUs to provide ATM services to nonmembers
where it is "necessary or requisite" to the FCU's ability
to provide such service to its own members. For example, an FCU
can allow nonmembers to use its ATM in order to assure that its
own members will have access through ATMs of other institutions
in the network. That is not the case here.
Ms. Jan Hesalroad
Page Two
The July 1990 letter referenced in your incoming, explains that the sale of postage stamps is only permitted as a "goodwill service" and only to members.
Sincerely,
Sheila A. Albin
GC/MFR:bhs
SSIC 3800
98-0409
cc: Region V