84 [83 O p. Att’y
FIN ANCIAL INS TIT UTIONS C REDIT U NIONS

) M EMBERSHIP R ESTRI CTIONS
May 5, 1998
Mr. H. Robert Hergenroede r Comm issi oner of Financ ial Regul ation

You have request ed our opini on concerni ng restrictions on mem bersh ip in State -cha rter ed credi t unions , in l ight of a recent Supreme Co urt d ecis ion , Na tion al C red it U nio n A dm in. v. First Nat’l Ba nk & Tru st C o., 118 S . Ct. 927 (19 98), thatrestricts mem bersh ip in fe derally ch artered credit un io ns . S pe cifica lly, you ask wh ether m emb ership in State -charte red cre dit unio ns is limi ted byMaryland law to those indivi duals having a singl e common bond with all ot her me mb ers o f the cred it un ion . In a ddi tion , y ou a sk whetherthe Commissione r of F inanc ial Re gulatio n has the au thority to rely upon the so- call ed “wild card” statute to allow mu ltiple employe r groups a s mem bers in a M aryland cre dit uni on, if th is bre adth of m em ber ship we re p erm issib le un der fed eral l aw
. Our opinion is as follows:
1. Under §6-210 of the FinancialInstituti ons (“FI”) Articl e, Maryland

Co de, all members of a Stat e-chart eredcredit union must sha re w ith al l oth er m em ber s a sin gle c om mo n bo nd.
2. If fede ral law allow ed m ultip le co mmon bonds among mem bers of feder all y char tered c redit

unions, the Commissione r could ap pl yth e “ wi ld ca rd” sta tute, FI § 6-20 8, to pe rmit m ultiple common bonds amon g memb ers of State-chartered credit unions. At prese nt, howeve r, fede ral l aw does not all ow multipl e common bond s
. Therefore, the Commissione r may not use the “wil d card” statute to allow mult iple c ommon bonds as a basis formem bersh ip in S tate- cha rtere d cr edit u nio ns.Gen. 84] 85
I The Supreme C ourt Decisi on Section109 of the Feder al Credi t Union Ac t, 48 Stat. 1219, 12 U.S .C. §1 759 ( the “federa l Act” ), prov ides tha t “[f]e deral c redit union membership shal l be limitedto groups havi ng a common bond of occupati on or associ at i on, or t o groups within a well-de fined neighborhood, co m m un ity or r ural di stri ct. ” Until 1982, the NationalCredit Uni o n A dm inistration (“N CU A” ) and its predeces sors h ad consistently inter preted §109 to requir e that the sa me common bond of occupat ion unite every member of an occ upa tion ally de fine d fe der al cre dit u nio n. In 1982, however, the NCUA rev ers ed its longst anding inter pretation of

the fe deral A ct and bega n per mitting mem bersh ip bymu ltiple, unre lated e mp loyer gro ups. U nder this rev ised inter pretation, the common bond requir ement of §109 appli ed only to each em ployer g roup withi n a multi -group cr edit uni on, rat her than to eve ry

memb er of the credi t union. For example, under NC UA ’s revise d interp retation of § 109 , a cred it union o riginally formed to ser

ve the employees of one co mp any w as allow ed to expand by openi ng its membership to employe es of many ot her companies. Each member would have a common occupati onal bond with one d ist inc t group of members but not with ot

her groups of me mb ers. In National Credi t Union Admin. v. First Nat’l Bank

& Trust Co ., a group of

banks and thei r nati onal trade associ ation c halle nged the NCU A’s approvalof membership of cer tain unrelat ed employ ee groups in the A T& T F amily Credit Union. The banks clai med that NC UA ’s revise d interp retation misco nstrue d the federa l Act. The Su pre me Co urt a gre ed w ith th e ba nks . I t held t ha t the common bon d restrictio n of §10 9 do es no t perm it a fed eral c redit union to be co m posed of multiple unrel ated groups having dis tinct common bonds. When C ongr ess enact ed the feder al Act i n 1932, the Court found, it unambiguously expr essed i ts i ntent t hatthe sa me common bond of occupati on must unit e allmembers of an occu pation ally defined fe deralcredit u nion . Bec ause Co ngre ss itself had addre ss ed t

he matt er , t

he Co u rt r eject ed the ar gument that the NC UA ’s inter

pretation of the fe de ra l Ac t should be accepted as a reaso nable one:86 [83 O p. Att’y [W]e first ask whether Congres s has “direc tly spoken to the precis e questi on at is sue. If the intent of Congress i s clear , that is the e n d of the matter; for the c ourt, as well as th e a ge nc y, must give effect

to the u nam bigu ously expresse d in te ntof

Con gr es s. ” .

.. If

we de t ermine that C ong ress ha s not d irectly spoken to the precise que sti on at is sue, we then inquire w hether the a ge nc y’ s inter pretation is re as ona

bl e.
.. . B ec au se we conclude that Congress has made it cl ear that the sa me common bond of occupation m us t unite each member of a n o ccup ationa lly definedfederalcr ed it

uni on, we hold that

the NC UA ’s contra ry in terpr et ation i s imp erm issib le ....
118 S. Ct. at 938-39 ( quoting Chevr on U .S.A ., I nc . v. Natural Resources Defens e Council, Inc. , 467 U .S. 837 (198 4)).

II
M ary land Re striction s on C redit U nion M em bers hip
FI Titl e 6 governs St ate-c harter ed credi t unions . Those who form a c redit

union are required by

FI §6-201 to have a common bond: (a) In this sec tion “o rgan izati o n” means

anytrade, professi on, cl ub, un i on, church congregat ion, pa ris h, s oc iet y, or associ ation, or any fr aterna l, c ooperative, or ot her org aniz ation

. (b) Seven or m o re adult indivi duals, each of whom is a r esident

of this State and all of whom have one of t

he foll owing common bonds , may ac t as inco rpora to rs to for m a credit u nion und er this su btitle:Gen. 84] 87 (1) Sim ilar occ upatio ns; (2) Membership in the same or simil ar or gan izatio ns, p rof essio ns, o r assoc iations; ( 3) Employment by

a com mo n emp loyer; (4) Em plo y me nt within a defined business district , industr ial park, or shopping center; or (5) Res idenc e w ithin an id en tifiable neighborhood, community , rur al dis tri ct, or cou nty. (Em phas is added.) Fur

thermore, under FI §6-210, every member of a credit union must share “with al l other members” a common bond: The mem bers o f a cre dit unio n are: (1) Each i ncorporat or; and (2) E ach o ther pe rson w ho: (i) Is electe d to m emb ership ; (ii) Subscribes to and pays for at l east one s hare; (iii) Pays an y entranc e fee ; (iv) Shares with all other members o f the credit

union one o

f the common bonds approved

by the Commissioner

and set out under the bylaws ; and (v) M eets all o f the o ther req uirem ents of the bylaws. (Em pha sis ad ded .)88 [83 O p. Att’y The co mmonbon d r es tric ti ons of Mary land l aw, as they app ly to both in corp oration of an d m emb ership in State -charte red cre dit u nions, are sim ilar to the limitation s imp osed upo n their federa l coun terparts by §109 of the feder al Act, as def initively constr ued by the Sup reme Co urt. If the re is a co ntrast t o be drawn with the federalAct, i t is that FI§§6-20 1 and §6-2 10 ev en m ore cle arly express a legi slat ive intent to l imit membe r ship t o those sharing a sing le co mm on b ond

. Itwould be diffi cult to imagine statutor y l anguage that

wo uld more clearly arti c ulate a single com mon bond lim itation. In co nstrui ng a stat

ute, “the car dinal r

ule is to ascer

tain and carry

out the real l egisl ative intention. The primary source of legi slat ive intent is, of c our se, th e lan gua ge o f the statu te itse lf”. State v. Pagano , 341 M d. 129 , 133, 6 69 A .2d 13 39 (1 996 ). As th e Co urt of A ppea ls recen tlyobserved, “When the plain meaning of the l anguage is c lear and unambiguous, and consistent with bot h the broad purposes of the legis lati on, and the spec ific purpose of t he pr ovisi on being inter preted, our inqui ryis at an end.” Lew is v. State , 348 Md. 648, 653, 705 A.2d 1 128 (19 98). Judg in g fro m the legi slat ive his tory , the “clear and unambiguous” statutory language is en tir ely

consistent with t

he evident legislativ e pur pose : to limit the membership of Statecharte red credit unions by means of the com mo n bo nd re quirem ent. Pr iorto 1988, FI §6- 210 did not contain the common bond requir ement for me mbers; on ly incorporators were required to sha re one common bond. In Chapter 635 of t he Laws of Maryland 1988, how ever, the General Assembly added the membership requir ement in FI §6-21 0(2)(iv). Chapter 635 was enacted fol lowing the s avings and loan cris is, to faci lit ate the conversi on of cert ain State-chart ered mutual savin gs an d loan assoc iations (“ S& Ls”) to M ary landcharte red credit u nion s. W hile the legislativ e his to ry offe rs little direct guidance on t

he issu e, the topi c of a common bond was appa rently a conc e rn, because the member s of conv erting S&Ls wo uld not all s hare a single common bond. Chapter 635 include d a special membership provision applicable t o converting S&L s:

In additi on to membershi p autho rized in §6-210 of this title, a credi t un ion resul ting from a con versio n un der thi s subti tle may perm itindivi dual s who, at t he time ofGen. 84] 89

1 In carr ying o ut the statutory scheme, the Commissioner may approvefor eac

h credit union only

one of the common

bonds set o ut in FI §6-201(b). conversi on, are members, savings a ccount

holders, directors, officer s, employee s, or borrow ers of a mutualas soc iati on, to bec ome members of the r esult ing credit union. FI § 9-1 109

. If FI §6-210 did not di sall ow multipl e common bonds among mem bers of a Stat e-chart ered cre dit uni on, there w ould have been no need for the Ge neral A ssem bly to enac t FI §9 -110 9 to ac com mo date mem bers of convert ing S&Ls who wou ld not ot herwise satis fy t

he single common bond requirement . To r ead FI §6-210 as per mitt ing more thana si ngle common bond of membersh ip woul d rend er FI §9-1109 sup erfl uou s, a result at odds wit h accepted principl es of statu tory co nstru ction

. Thus, in our opi nion, t

he only acceptabl e readi ng of FI §6-210 is that St ate-c harter ed cr edit unions must be composed solely of members who share with al l other members one common bond. 1

III
The “W ild Car d” Sta tute
FI §6-2 08, so metim es referred to as the c redit un io n “w ild card” statute , provides as follows: “Notwithst anding any ot her provisi on of this titl e, on approval of the Commissione r and the Cred itUn ion Ins uran ce C orpo ration, a credit u nion may en gage in anyad dit ional c redit

union act ivit

y or provide any

relat ed servi ce underthe same condi tions that f ederallaw or regul ation requires or permits as to fede ral cr edit uni ons.” The credit

union “wild car d” stat

ute was ori ginally enac tedas formerArticle 11, S ection 141 A b y Chap ter 243 (Sen ate B ill 499 ) of th e Laws of M aryland 1 978 . The statutory lan guag e is similar to the banking counterpa rtin F I §5 -50 4. See gene rally 81 Opinions of the Attorney General

50 (1996

)

.90 [83 O p. Att’y
From it s ena ctm ent, the cre dit uni on “wild car d” law creat ed the potenti al for c omplete parity between federaland State -chart ered credit unio ns. In a letter date d A pril 3, 19 78, in supp ort of S enate Bill 499 , the ch airma n of wh at wa s then called the M aryland C redit Union Insuranc e Corporati on stat ed that “[the] principal rea son for the great di sparity [i n numbers] bet ween state charte red credit unions and federally

chartered credit

unions is the gr eater f lexibility permitted und er fed eral law in referenc e to the federal ly charte red credit unions. ” The clear impo rt of this c om men t is that Se nate B ill 499, wh ich inc luded the cre dit unio n “w ild card ” statute , wo uld serve to cr ea te for

St at e- chart er ed c re di t uni ons th e s ame “flexibility” ot

herwise available to their federal counterparts

. Like the b anking “wil d card” st atute , FI §6- 208 can only be used bythe Commissione r to aut horize “ any additi onalcredit union activity or .. . rel ated servi ce .” In our opinion , expa nsion of mem bersh ip common bond crit eria, as may be permitted by fede ral law or regul ation, consti tutes an additi ona l act ivit y or relat ed servi ce. As we previousl y stated i n 81 Opinions of the Attorney General

50, the text of

the st atute should not

be constr

ued to defeat

its underlying purpose. Se e, e. g. , R omm v. Flax, 340 Md. 690, 688 A.2d 1 (1995). In this case, t

hat purpos e is t

he crea tion o f com petitive p arity between State-c hartere d cred it union s and their federal ly charte red counterparts. Cred it union s ma y only offe r their ser vices to thos e individ uals who qualif

y under applic able law for membership. The determi nationof a prop er field of m emb ership is th e b as ic “ ac tiv ity” upon which thei r abil ity to offer servic es is establ ished. Therefore, the ability to admit members from groups not ot herwise per

mitt ed by State law would consti tute an additi onal act ivit y for purposes of the “w ild card ” sta tute. It fol lows that , notwit hstandi ng the limitat ions of FI §6-210, the Co mm is sioner may appl y federal laws or regulations when considering the app roval of mul tipl e common bonds of membership. The decisi on of the Supreme Court discuss ed in Part

I above has clari fied that, at pres ent, §109 of the feder al Ac t does not p ermit federalcredit

union membershi p of multiple unrel ated groups , each having distinct

commo n bonds. Therefore, the Commissioner may not at pres ent inv oke F I §6-2 08 to appr ove S tate-ch artered credit unio n m emb ership com pose d of mu ltiple com mo n bo nds. S hou ldGen. 84] 91

2 FI § 6-208 re quires the addit i onal approval of the Credit Union Insurance Corporation. T his additional appr oval pre sumably

is only required with respect to credit unions that hold depo sits i nsured by the Corporation. Congress enact pending legis lati on, H.R. 1151, to broaden §109, the Commissioner may

then have r oom to act under FI §6-208. 2

IV Conclusion
In summ ary , i t is our opini on that a ll members of a Stat echarte red cred it unio n m ust sha re w ith all othe r mem bers a single common bond. FI §6- 210 does not permit multi ple common bonds of memb ersh ip. While the “wil d card” st atute grants to the Commissionerthe au thority to ap ply to Stat e-chart ered cre dit uni ons federallaws or re gulati ons that oth erw ise per mit multi ple common bonds of membership, federallaw does not pr esently do so.
J. Joseph C urran, Jr. AttorneyGeneral Tho mas L. G oun aris Ass ist ant At torney General Jack Sch wa rtz Chief Counsel Opinions and Advic e