Les Alvis, Esquire
Riley, Ford, Caldwell & Cork
207 Court Street, P.O. Box 1836
Tupelo, Mississippi 38802
You have asked for a legal opinion on a "proposed financial
institution servicing subsidiary" and a proposed FCU that
are briefly described in attachments to your letter.
FCU chartering is handled by the National Credit Union Administration's
(NCUA's) regional offices. Chartering requirements are found
in NCUA's Chartering and Field of Membership Manual, IRPS 99-1.
You propose a community charter credit union that would primarily
serve the employees of a corporation. An FCU may be chartered
as a community charter or an occupational charter, but not a combination
as you have suggested. If you are still interested in chartering
an FCU, you should contact our Region III Office, Division of
Insurance, (678) 443-3000.
You also ask whether an FCU can contract with a third party, referred
to in your letter as a "proposed financial institution servicing
subsidiary," to provide services to the FCU and its members.
An FCU can contract with a third party to provide services as
long as the services are ones that the FCU is allowed to contract
for and the FCU does not receive compensation in excess of that
allowed in Part 721 of NCUA's regulations. 12 C.F.R. Part 721.
The proposed contract requires the FCU to follow the contractor's
advice. An FCU's board of directors is not allowed to abrogate
its decision making responsibility. If this requirement is part
of the contract, it is impermissible.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/MFR:bhs
SSIC 3000
99-0718