Compliance Blog

Last week, NCUA released Legal Opinion Letter 08-0120 (July 14, 2008).  You can access it here.  NCUA was asked to determine whether a Massachusetts law applied to federal credit unions.   In the letter, NCUA determined that it did not have to make a preemption analysis, as a close inspection showed that the law was not intended to apply to federal credit unions.  In the letter, NCUA states:

The purpose and scope sections of the state regulations, 940 Mass. Code Regs. 8.01-.02, indicate the Attorney General of Massachusetts promulgated the regulations under the authority granted in “M.G.L. c 93A §2(c),” which is part of a state law titled the “Regulation of Business Practice and Consumer Protection Act,” and often referred to as Chapter 93A. Mass. Gen. Laws ch. 93A, §§1-11. Section 2(c) of Chapter 93A authorizes the Attorney General to promulgate rules and regulations interpreting Section 2(a), which states, in part, that unfair and deceptive acts or practices are “unlawful.” Id. at §2(a). Under the Attorney General’s authority, the state regulations define and prohibit certain types of activities by mortgage brokers and mortgage lenders as unfair or deceptive acts or practices.
By its own terms, Chapter 93A, however, does not apply to FCU lending activities. Chapter 93A states:

Nothing in this chapter shall apply to transactions or actions otherwise permitted under laws as administered by any regulatory board or officer acting under statutory authority of the commonwealth or of the United States. Mass. Gen. Laws ch. 93A, §3.

Federal law, the Federal Credit Union Act, permits FCUs to engage in lending, including mortgage lending, and the National Credit Union Administration (NCUA), a regulatory board, regulates those activities under the authority of the same federal law. 12 U.S.C. 1751 et seq. We conclude that, because Chapter 93A does not apply to FCUs, the Attorney General’s regulations issued under the authority of Chapter 93A are likewise inapplicable to FCUs.

This legal opinion letter is a good reminder that when you want to determine if a local law or requirement applies to your operation, nothing beats a close reading of the law itself.