CREDIT UNIONS ‑- STATE CHARTERED ‑- LOANS TO OTHER STATE AND FEDERAL CREDIT UNIONS

CREDIT UNIONS ‑- STATE CHARTERED ‑- LOANS TO OTHER STATE AND FEDERAL CREDIT UNIONS

A state chartered credit union may make loans to other state chartered or Federal credit unions within the State of Washington only if such other credit unions are members of the lending credit union.

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                                                               November 28, 1951

A. O. Kent, Supervisor
Division of Savings and Loan
Public Lands-Social Security Building
Olympia, Washington                                                                                                              Cite as: AGO 51-53 No. 179

Dear Sir:

            By letter of October 22, 1951, you refer to the provisions of section 23 of the Washington Credit Union Act, as amended by section 4, chapter 213, Laws of 1947, and request our opinion on the following question:

            "May one state chartered Credit Union make loans to other state chartered or Federal Credit Unions within the State of Washington?"

            Our conclusion is that:

            A state chartered credit union may make loans to other state chartered or Federal credit unions within the State of Washington only if such other credit unions are members of the lending credit union.

                                                                     ANALYSIS

            Section 23, chapter 173, Laws of 1933 (Rem. Rev. Stat. Supp. § 3923-23), as last amended by section 4, chapter 213, Laws of 1947 (§ 3923-23 Rem. Supp. 1947), provides in part that:

             [[Orig. Op. Page 2]]

            "A Credit Union may make loans of the following classes to its members * * *."  (Emphasis supplied.)

            Immediately thereafter this section of the statute specifically designates three distinct classes of loans, which are in substance:  (1) Personal loans secured by note; (2) loans secured by real estate mortgages; (3) loans to other credit unions.  These three classes of loans are those which a credit union may make "to its members."  Class (3) of the loans permitted by this section‑-loans to other credit unions‑-is, in our opinion, clearly restricted to loans to member credit unions.

            This interpretation is in conformity with the intent expressed throughout the act that a credit union shall make loans to its members only.  Section 1 of the act, as last amended by section 1, chapter 131, Laws of 1943 (§ 3923-1 Rem. Supp. 1943), for example, declares that a credit union is a cooperative society incorporated "for the two-fold purpose" of (1) "promoting thrift among its members," and (2) "creating a source of credit for them [its members]."  (Emphasis supplied.)

            Section 21 of the act, as last amended by section 17, chapter 131, Laws of 1943 (§ 3923-21 Rem. Supp. 1943), expressly provides that:

            "* * *All borrowers shall have not less than one fully paid share."  (Emphasis supplied.)

            You are, therefore, advised that a credit union may make loans to other credit unions who are members of the lending credit union, but not otherwise.

Very truly yours,

SMITH TROY
Attorney General

FRED HARLOCKER
Assistant Attorney General