July 1, 1998
Gail Mackey, Supervisory Committee Chairperson
Womens Southwest Federal Credit Union
P.O. Box 720207
Dallas, Texas 75372-0207
You advise that your federal credit union (FCU) has a policy that
requires the board of directors to approve a loan to a director,
committee member or employee if the loan exceeds $3,000 over pledged
shares. Your letter refers to a letter from me to Ed Templeton,
dated May 29, 1998, that states that, if an FCU has a credit committee,
it is not permissible for the board of directors to approve all
loans. You ask whether it is permissible for an FCU to have a
lending policy that is "more restrictive" than the FCU
Act. Our view is that this is not a question of your policy being
more restrictive than the process for approval of loans contemplated
by the FCU Act. The FCU Act, however, explicitly provides that,
if an FCU's bylaws provide for a credit committee, it is the credit
committee that approves loans except for those which must be approved
by the board of directors. 12 U.S.C. §§1761c,1757(5)(A)(iv)
and (v).
The letter to Mr. Templeton does not say, as you stated, that
"the Board of Directors does not have the authority to review
loans to officials for amounts of $20,000 or less." (Emphasis
added). It is our view that an FCU's board of directors can review
loans to officials that are below $20,000, the amount above which
the FCU Act requires board approval. The board of directors can,
if it chooses, review all loans to officials and, as part of its
review, can disapprove loans that a credit committee has previously
approved.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/MFR:bhs
SSIC 3500
98-0653