                           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.




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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




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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




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