The Attorney General of Texas
November 26, 1980
MARK WHITE
Attorney General
Mr. John P. Parsons Opinion No. MW-281
Commissioner
Credit Union Department Re: The authority of state-
914 East Anderson Lane chartered credit unions to charge
Austin, Texas 76752 rates of interest authorized under
federal law
Dear Mr. Parsons:
You have requested our opinion as to whether state-chartered credit
unions are authorized to charge rates of interest that are set by federal law.
Article XVI, section ll of the Texas Constitution provides in pertinent
part:
The Legislature shall have authority to classify loans
and lenders, license and regulate lenders, define
interest and fix maximum rates of interest. . . .
Pursuant to this mandate, the legislature enacted as a part of the
Texas Credit Union Act, article 2461-7.01, V.T.C.S., which provides:
If made in accordance with rules and regulations
promulgated by the commissioner, a credit union may
make loans to members. . . at rates of interest not
exceeding one percent per month on the unpaid
monthly balance. (Emphasis added).
Your question concerns the recently enacted federal law, the
Depository Institutions Deregulation and Monetary Control Act of 1980, Pub.
L. No. 96-221 (1960). Section 310 of Pub. L. No. 96-221 amended the Federal
Credit Union Act, 12 U.S.C. 1757(5)(A)(vi), to increase the authorized
maximum rate of interest from 12% to 15% per annum for credit unions
which were organized in accordance with the provisions of the Federal
Credit Union Act. It should be noted that section 310 did not purport to
preempt state law to make this provision applicable to state-chartered
credit unions.
p. a99
Mr. John P. Parsons - Page Two @W-281)
The Texas Credit Union Act in article 2461-4.03, V.T.C.S., provides:
The commissioner by rule or regulation may authorize credit
unions organized under this Act to engage in any activity in
which the credit unions could engage if they were operating as
federally chartered credit unions at the time authority is
granted, if on investigation or hearing, the commissioner finds
Tt necessary to preserve and protect-the welfare of the credit
unions and to promote the general economy of this state.
(Emphasis added).
Specifically, you have asked whether pursuant to article 2461-4.03 the commis-
sioner may issue a regulation authorizing state-chartered credit unions to charge the
rate authorized in section 310 of Pub. L. No. 96-221.
In a previous opinion from this office, it was established that the authority to
establish maximum interest rates lies solely with the legislature. See Attorney
General Opinion MW-17 (1979). If it &es not enact such statutes, theconstitution
itself fixes a ten per cent maximum. Furthermore, the legislature may not delegate
its power to establish maximum interest rates. See Letter Advisory No. 146 (1977).
Therefore, article 2461-4.03, V.T.C.S., does not givzhe credit union commissioner the
authority to issue a regulation authorizing state-chartered credit unions to charge a
greater rate of interest than that authorized by the legislature in article 2461-7.01,
V.T.C.S.
SUMMARY
Article 2461-4.03, V.T.C.S., does not give the credit union
commissioner the authority to issue a regulation authorizing
state-chartered credit unions to charge a greater rate of
interest than that authorized by the legislature.
MARK WHITE
Attorney General of Texas
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Mitch Winnick
Assistant Attorney General
p. 900
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Mr. John P. Parsons - Page Three (MW-281)
APPROVED:
OPINION COMMlTTEE
Susan L. Garrison, Acting Chairman
Jon Bible
Rick Gilpin
Thomas M. Pollan
Mitch Winick
Bruce Youngblood
p. 901