June 26, 1998
Roderick R. Rovzar, Esq.
Norman, Hanson & DeTroy
415 Congress Street
P.O. Box 4600
Portland, Maine 04112-4600
Dear Mr. Rovzar:
You have asked for an opinion concerning the propriety of a federal
credit union (FCU) employing the husband of a senior management
official to perform maintenance work on real estate owned by the
credit union as a result of foreclosure on a loan. The board
of directors of the credit union approved the hiring and the chairman
of the board approves any invoices for his services. As discussed
below, this employment appears to be permissible.
NCUA regulations prohibit an official or employee of a federal
credit union or an immediate family member of an official or employee
of a federal credit union from receiving any compensation in connection
with a loan made by the credit union. 12 C.F.R. §701.21(c)(8).
In this case, our opinion is that the connection between the
making of a loan, which may end up in foreclosure, and the payment
of compensation to the senior management official's husband for
maintenance on the foreclosed property is so attenuated that it
does not violate the regulation.
Please note that FCU Bylaws prohibit the senior management official
from participating in the deliberation on or the determination
concerning any matter affecting her pecuniary interest, including
the selection of her spouse for such a service contract or the
payment for such services. FCU Bylaws, Article XIX, Section 4.
The FCU should also be cautioned that the payment of such compensation
is subject to all state and federal revenue reporting and record
keeping requirements
Sincerely,
Sheila A. Albin
Associate General Counsel
OGC/DMS:bhs
SSIC 3500
98-0501