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                     E            NEY     GENERAL,
                              F a‘E-XAS




                            August 30, 1963


        Honorable R. A. Benson            opine0n   NO.   c-132
        Savings and Loan Commissioner
        1010 Lavaca Street                Re: Interpretationof the
        Austin 1, Texas                       scope and extent of the
                                              rule-makingpower of the
                                              Savings and Loan Commls-
                                              sloner and the Building
                                              and Loan Section of the
                                              Finance Commissionwith
                                              reference to specific
                                              sections of the new Texas
                                              Savings and Loan Act
                                              codified a8 Article 652a,
        Dear Mr. Benson:                      Vernon's Civil Statutes.
                  You have requested the opinion of this office as
        to the proper Interpretationof the rule-makingpower of the
        Savings and Loan Commissionerand the Building and Loan Sec-
        tion of the Finance Commissionwith respect to certain aec-
        tlona of the Savings and Loan Act (Acts, 58th Legislature,
        Regular Session, 1963, Chapter 113, page 269), codified aa
        Article 852a, Vernon's Civil Statutes. The Savings and Loan
        Act becomes effective on January 1, 1964.
                  Your first question deals with the rule-making
        power conveyed by Section 5.04 of the Texas Savings and Loan
        Act. That section Is quoted:
                  ?The Commlaalonerand the Building and
             Loan Section of the Finance Commission,act-
             ing pursuant to the rule-makingpower, dele-
             gated by House Bill 91, Chapter 198, Acts of
             the Fifty-seventhLegislature,Regular Sea-
             slon, 1961 codified as Article 342-205,
             Section (djf a8 the flame may be amended shall,
             from time to tlme, promulgate such rules and
             regulationsIn respect to loans by associations
             operating under this law as may be reasonably


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 Honorable R. A. Benson,   page 2 (C-132)


      necessary to assure that such loans are In
      keeping with sound lending practicea and pro-
      mote the purposes of this Act; provided that
      such rules and regulationsshall not prohibit
      an associationfrom making any loan or lnvest-
      ment that a Federal association could make
      under applicableFederal regulations.”
           At the outset, we must note that in Attorney Gen-
 eral's Opinion No. C-127 (1963), it was held that Article
 342-205 did not convey any rule-makingpower to the Commls-
 sioner or the Building and Loan Section. Such eneral   power
 waa delegated in Article 342-114, and Article 382-205 merely
 made reference to the delegation of already existing power
 and establishedthe mechanics in the exercise of such power.
 We thus have the,sltuatlonof the Texas Savings and Loan Act
 in Section 5.04, quoted above, directing the exercise of a
 power which does not exist under the Act quoted In Section
 5.04. The question then is whether by the citation of an in-
 correct Act the Legislaturehas made impossible the exercise
 of rule-makingauthority In the particulararea dealt with In
 Section 5.04.
            If we were to hold that the technical error des-
  cribed above operated to deprive the Commissioner  and the
  Building and Loan Section from exercisingany rule-making
  power pursuant to Section  5.04, we would be placed in the
  position of saying that the Legislaturehad done a useless
  thing. The entire function and purpose of Section   5.04
  would be erased from the statute books. The general provl-
  slons of Article 342-114 grantto the Building and Loan
  Section full power to make all necessary rules and regulations~
‘,for the necessary regulationof the savings and loan industry.
  That Act has not been repealed and Is in full force and effect.
  The obvious purpose of Section 5.04 of the Savings and Loan
  Act was to direct the Building and Loan Section and the Com-
  missioner In the preparationof rules and regulations to carry
  out the Intent of the Legislature,expressed In Section 5.04.
  The fact that the Legislature,In drafting Section 5.04, made
  reference to an erroneousAct, one which did not grant the
  rule-makingpower per se, is in our view immaterial. The
  power to make rules exists  by virtue of Article 342-114 and
  no attempt has been made to remove such power. Section 5.04
  merely establishesthe goals toward which such rules should
  be directed. We hold that the general grant of rule-making
  power to the Building and Loan Section contained In Article
  342-114 prevails over the specific mention of such power
  erroneouslycontained in Section 5.04 of the Savings and Loan
  Act, and that in making rules and regulationsfor the Savings
  and Loan Industry, the Building and Loan Section and the Savings
  and Loan Commissionerare bound by the provisions of Article

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Honorable R. A. Benson, page 3 (C- 132 )


;4;1;114,and the further directions contained In Section
 . .
          Your second question Is,directed to the rule-
making power of the Commissionerand the Building and
Loan Section with regard to the Investmentsapproved and
authorized In Section 5.11 of the Savlrgs and Loan Act.
Section 5.11 Is quoted below:
         "Every association shall have power to
    Invest in obligationsof, or guaranteed as
    to principal and Interest by, the United
    States or this State; In stock of a Federal
    Home Loan Bank of which it is eligible to be
    a member, and In any obligationsor consoll-
    dated obligationsof any Federal Home Loan
    Bank or Banks; In stock or obligationsof
    the Federal Savings and Loan Insurance Corpoi
    ration; in stock or obIlgatlonsof a national
    mortgage aaaoclationor any successor or aucL
    cessors thereto; In demand, time, or savings
    deposits with any bank or trust company the
    deposits of which are insured by the Federal
    Deposit Insurance Corporation;In stock or
    obligationsof any corporationor agency of
    the United States or this State, or In deposits
    therewith to the extent that such corporation
    or agency assists in furthering or facilitating
    the assoclatlon~spurposes or power; In savings
    accounts of any association operating under the
    provisions of this Act and of any Federal as-
    sociation;In bonds, notes, or other evidences
    of Indebtednesswhich are a general obligation
    of any city, town, village, county, school
    district, or other municipal corporationor
    political subdivisionof this State; and In
    such other securitiesor obligationswhich the
    Commissionermay approve and place on a publlsh-
    ed list. An association Investing In securities
    which are listed by the Commlsalonershall not
    be required to dispose of such securities if at
    a later time the Commissionershall remove same
    from list. No security owned by an association
    shall be carried on Its books at more than the
    actual coat thereof unless a different treatment
    Is permitted by the Commissionerin writing."



                          -657-
Honorable R. A. Benson, page 4 (C- 132 )


          The forerunner of Section 5.11 was Article 88ia-
37, Section 5. This section granted authority to make ln-
vestments In certain enumerated classes of property only upon
the basis of rules and regulationspromul ated by the Banking
Commissionerof Texas. In Article 342-11& the Building and
Loan Section was directed to recommend to the Ranking Com-
missioner and his successor,the Savings and Loan Commissioner,
proposed rules and regulationsIn this area. The Savings
and Loan Commissionerwas therefore the person who had the
ultimate responalbllltyfor preparationof rules and regula-
tions for the conduct of the particular Investmentsat issue
here. We must note that Article 342-114 made no general grant
of rule-makingpower In this particular area; rather, Article
342-114 made a very specific grant of power and such power
should be consideredas limited within Its specific terms.
By the Texas Savings and Loan Act it Is clear that the Legls-
lature declined to carry over the old rule-makingpower which
had been exercised by the Commissionerunder Article 88Ia-37.
Section 5.11 carries within It authorizationfor the exercise
of only very limited authority for the Commissionerand there
is no general grant of,authoritywhich provides a basis for
general rule-makingwith regard to Investment in securities.
Section 5.11 is clear, and by Its terms leaves no room for
the exercise of any additional regulatory authority In the
specific area dealt with.

                    SUMMARY
         An erroneous reference to a certain Act
    does not render null and void the authority
    granted In Section 5.04 of the Texas Savings
    and Loan Act (Article 852a, V.C.S.) as to rules
    and regulations to be promulgatedby the Bulld-
    lng and Loan Section of the Finance Commission.
         Under Section 5.11 of the Texas Savings
    and Loan Act, neither the Commlsslonernor the
    Building and Loan Section of the Finance Com-
    mission have any general authority to make rules
    and regulationsas to investments,and may only
    exercise the specific powers granted In the
    statute.




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     Honorable R. A. Benson, page 5 (C-132)


                                  Very truly yours,
                                  WAGGONER CARR
                                  Attorney General


                                  By:
                                          Malaolm L. Quick
                                          Asal&ant
     MLQ:ma:mkh
     APPROVED:
     OPINION COMMITTEE
     W. V. Geppert, Chairman
     Joe Trlmble
     John Reeves
     Gilbert Hargrave
     J. C. Davis
     APPROVEDFOR TRE ATTORNEY GENERAL
     BY: Stanton Stone




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