COMMONWEALTH OF MASSACHUSETTS
Office of Consumer Affairs and Business Regulation
DIVISION OF BANKS
1000 Washington Street, 10th Floor, Boston, MA 02118-6400
617-956-1500 * Fax (617)956-1599 * TDD (617)956-1577
www.Mass.Gov/DOB
Charles D. Baker MIKE KENNEALY
Governor SECRETARY OF HOUSING AND
ECONOMIC DEVELOPMENT
Karyn E. Polito
Lt. Governor EDWARD A. PALLESCHI
UNDERSECRETARY
MARY L. GALLAGHER
COMMISSIONER
August 22, 2019
The Honorable Steven T. James
Clerk of the House of Representatives
State House, Room 145
Boston, Massachusetts 02133
Dear Mr. James:
Enclosed for filing please find the Division of Banks’ (Division) summary of its proposed
amendments to 209 CMR 50.00: Parity with Federal Credit Unions (Parity Regulations), which are the
implementing regulations for Massachusetts General Laws chapter 171, section 6A. This statute
authorizes the Commissioner of Banks to propose regulations, subject to Legislative review, to authorize
activities that are available to federally chartered credit unions in order to make the state charter more
competitive. A copy of the statute is attached to this letter. The summary at Appendix A and a copy of
the proposed amendments at Appendix B are required to be filed with your office pursuant to the statute.
The Division’s required statement that it has complied with the pertinent provisions of Massachusetts
General Laws chapter 30A is found at Appendix C.
Public Hearing
A public hearing on these amendments was held pursuant to Massachusetts General Laws chapter
30A on Thursday, September 13, 2018 and written comments were accepted through 5:00 p.m. on Friday,
September 21, 2018. The credit union trade association and the banking trade association provided oral
and written comments on the proposed amendments. The credit union trade association was in favor and
proposed additional amendments. The banking trade association expressed concerns regarding the
proposed additional powers.
Summary of Proposed Amendments
The proposed amendments reorganize and amend the Incidental Powers authorities. There are
two new authorities proposed under Incidental Powers at 209 CMR 50.09(4)(a) and 209 CMR
50.09(4)(b). The first proposed authority is at 209 CMR 50.09(4)(a), which would authorize a state-
chartered credit union to apply for expedited approval from the Division for certain activities that the
federal regulator, the National Credit Union Administration (NCUA), has deemed approved or deemed
acceptable in writing to be an Incidental Power, and which is reasonably related to an individual power as
set forth in 209 CMR 50.09(2) or 209 CMR 50.09(3). The second proposed authority is at 209 CMR
50.09(4)(b), which would authorize a state-chartered credit union to apply for approval from the Division
for activities that the NCUA has deemed approved or deemed acceptable in writing as Incidental Powers
but which are not included in 209 CMR 50.09(2) or 209 CMR 50.09(3). In addition, the proposed
amendments restructure and streamline certain procedural requirements by allowing state-chartered credit
unions to exercise certain authorities without approval or notice which previously required approval or
notice.
General Background on the Parity Regulations Amendment Process
The Parity with Federal Credit Union regulations had been authorized by the enactment of
Chapter 223 of the Acts of 1998, An Act Relative to State-Chartered Credit Unions (Act), which
authorized the Division to propose regulations that would grant state-chartered credit unions certain
expanded powers enjoyed by federally-chartered credit unions. This Act amended Massachusetts General
Laws chapter 171, The Massachusetts Credit Union Act, by inserting a new section 6A, which permits
state-chartered credit unions to exercise certain powers granted to federal credit unions under the Federal
Credit Union Act1. In addition, this provision specifically charged the Commissioner of Banks with
promulgating regulations authorizing state-chartered credit unions to exercise such federal credit union
powers not otherwise prohibited by Massachusetts law. The Act required the Division’s proposed
regulations to be subject to Legislative review. Under the law, the Division is precluded from filing final
regulations until 90 days after they have been submitted to the Legislature.
The Act’s purpose was to ensure that state-chartered credit unions remain competitive with their
federally-chartered credit union counterparts in terms of permissible powers and activities. Toward that
end, the Parity Regulations and the proposed amendments grant state-chartered credit unions certain
expanded powers enjoyed by federally-chartered credit unions in order to promote "competitive equality"
between state-chartered credit unions and federally-chartered credit unions. In addition, the Parity
Regulations cover all adequately-capitalized and eligible credit unions regardless of size, so all eligible
small- and medium-sized credit unions are able to take full advantage of the expanded authorities. In
general, the Division’s goal in proposing amendments to the Parity Regulations is to continue to offer
new authorities in a manner that will make it easier for eligible credit unions to implement and remain
competitive.
The Parity Regulations were not intended to be a definitive or static listing of federally-chartered
credit union powers. The Legislature, the Division, and the credit union movement all view the federally-
chartered credit union parity process as continuously evolving. Consequently, it was intended that
additional federally-chartered credit union powers would be adopted on a periodic basis to reflect changes
in federal credit union laws, official interpretations, and operating conditions.
Please contact me at (617) 956-1510 or the Division’s Legal Unit at (617) 956-1520 if there are
any questions regarding these proposed regulations.
Sincerely,
Mary L. Gallagher
Commissioner of Banks
1 12 U.S.C. §§1751 et seq.
 Appendix A
Proposed Amendments to 209 CMR 50.00: Parity with Federal Credit Unions
Overview
The purpose of 209 CMR 50.00 et seq. (Parity Regulations) is to implement G.L. c. 171, s. 6A,
which authorizes the Commissioner of Banks to promulgate regulations to grant state-chartered credit
unions certain expanded powers in parity with federally-chartered credit unions. The proposed
amendments primarily reorganize and amend the Incidental Powers authorities, and restore them to a
single section, proposed 209 CMR 50.09. In addition, there are two new authorities proposed under
Incidental Powers, discussed below. The proposed amendments restructure and streamline procedural
requirements by allowing state-chartered credit unions to exercise certain authorities that previously
required approval or notice to do so without approval or notice.
Following is an overview and a section-by-section summary of the proposed amendments.
New Authorities
The new authorities set forth in the proposed amendments are as follows:
1. Authority to apply for approval for certain activities that the federal regulator, the
National Credit Union Administration (NCUA), has deemed approved or deemed
acceptable in writing to be an Incidental Power, and which is reasonably related to an
individual power as set forth in the Parity Regulations; and
2. Authority to apply for approval for certain activities that the NCUA has deemed
approved or deemed acceptable in writing as Incidental Powers but which are not
included in the Parity Regulations.
Reduced Regulatory Burden
Some of the major amendments to reduce regulatory burden are set forth below:
1. Authority for shared branch offices is amended from approval to notice;
2. Authority for community development investments is amended from approval to
requiring neither approval nor notice;
3. Authority for low-income designated credit unions and non-low income designated credit
unions to accept non-member deposits is amended from notice to requiring neither
approval or notice;
4. Authority for certain correspondent services for internal audits is amended from approval
to requiring neither approval nor notice;
5. Authority to establish charitable donation accounts is amended from notice to requiring
neither approval or notice;
6. Authority for certain correspondent services for other services to credit unions such as
loan processing is amended from approval to requiring neither approval nor notice;
 7. Authority for operational programs to offer payroll services is amended from notice to
requiring neither approval nor notice; and
8. Authority to provide trustee or custodial services is amended from an approval authority
to requiring neither approval nor notice.
Section-by-Section Summary
It should be noted that citations below are to the proposed amendments to the Parity Regulations.
209 CMR 50.05: Application Process to Conduct Certain Activities
The following authorities now have the following citations:
- Temporary Branch Offices: This authority is now at 209 CMR 50.05(3)(a).
- Employee Benefits Funded by Impermissible Investments: This authority is now at 209 CMR
CMR 50.05(3)(b).
- Pilot Investment Program: This authority is now at 209 CMR 50.05(3)(d).
- Secondary Capital: This authority is now at 209 CMR 50.05(3)(e).
- Private Label Investments: This authority is now at 209 CMR 50.03(f).
209 CMR 50.06: Notice Process to Conduct Certain Activities
- Investments in Land, Building, Improvements, and Equipment: This authority for
investments in land, building, improvements and equipment of more than $1,000,000 is now
at 209 CMR 50.06(3)(a).
- Shared Branch Offices: This authority to establish a operate a branch office on a shared basis
with one or more credit un ions or federal credit unions, which was formerly an approval
authority, is now a notice authority at 209 CMR 50.06(3)(a).
209 CMR 50.07: Activities Requiring No Application or Notice
- Investments in Land, Building, Improvements, and Equipment: This authority is now at 209
CMR 50.07(2)(h).
- Community Development Investments. This authority, which was formerly an approval
authority, is now a notice authority at 209 CMR 50.07(3)(i).
- Non-Member Deposits:
o Low Income Designated Credit Unions: This amendment provides authority for a
credit union designated as low-income by the Division and the NCUA to accept
deposits for any purpose from any source up to the aggregate of 20% of its existing
deposits or $3 million, whichever is greater. This authority, which was formerly a
notice authority, is now at 209 CMR 50.07(2)(j)1.
 o Non-Low Income Designated Credit Unions: This amendment provides authority for
a credit union that is not designated as low-income to accept deposits for any purpose
from any source up to the aggregate of 20% of its existing deposits or $3 million,
whichever is greater. This authority, which was formerly a notice authority, is now
at 209 CMR 50.07(2)(j)2.
209 CMR 50.09: Incidental Powers
As in the Parity Regulations in general, the Incidental Powers section is set up in three general
sections: provisions requiring notice, provisions requiring neither application nor notice, and provisions
requiring approval from the Division.
- General: Sets eligibility criteria that a credit union must be well- or adequately capitalized
and has not been notified that it is in troubled condition to engage in the activities in this
section, provided the activities continue to be deemed legally permissible by the
Commissioner and are conducted in accordance with applicable Massachusetts or federal law.
This provision is at 209 CMR 50.09(1).
- Notice Process to Conduct Certain Activities:
- General: In addition to the above criteria, written notice must be provided 30 days prior to
commencing the new activity. The Commissioner may modify or limit any activity for safety
and soundness reasons, and will provide notification of such limitations within the 30 day
notice period. A credit union may ask to waive, and the Commissioner may waive the
remaining notice period. This provision is at 209 CMR 50.09(2)(a).
- Notice: The notice must be in writing, and must include a complete description of the activity
conducted, the credit union’s investment in such activity, and a representation and
undertaking that the activity will be conducted in accordance with Massachusetts and federal
law. Any credit union filing notice pursuant to this provision is deemed to have agreed to
conduct the activity in a manner consistent with applicable guidelines. The Commissioner
may require other information. This provision is at 209 CMR 50.09(2)(b).
- Activities Subject to Notice:
 Certain Correspondent Services -- Internal Audits: A credit union may perform
internal audits for other credit unions. This was formerly an approval authority, and
is now at 209 CMR 50.09(2)(c)1.
 Non-Member Monetary Instrument Services: This authority is now at 209 CMR
50.09(2)(c)2.
 Certain Finders Activities: A credit union may make insurance, mutual funds and
annuities available to members subject to Massachusetts and federal law. A credit
union may also provide finder activities. This provision was updated to clarify that
insurance sales activities must also be in accordance with the provisions of G.L. c.
171, § 75B and 209 CMR 49.00 et seq. This provision is now at 209 CMR
50.09(3)(c)3.
- Activities Requiring No Application or Notice
General: A credit union that is well or adequately capitalized and not notified that it is in
troubled condition may engage in the activities without filing an application or providing
notice, provided the activities continue to be deemed legally permissible by the
Commissioner, and the activities are conducted in accordance with applicable Massachusetts
or federal law. This provision is at 209 CMR 50.09(3)a.
Permissible Activities:
 Certification Services: This provision is now at 209 CMR 50.09(3)(b)1.
 Charitable Contributions and Donations: This provision is now at 209 CMR
50.09(3)(b)2.
 Charitable Donation Accounts: This provision, which authorizes the establishment of
charitable donation accounts, was formerly a notice provision, and is now at 209
CMR 50.09(3)(b)3.
 Correspondent Services – Other Services: This provision, relative to a credit union
providing certain correspondent services to other credit unions, including but not
limited to loan processing, loan servicing, member check cashing services, disbursing
share withdrawals and loan proceeds, cashing and selling money orders, and
automated teller machine deposit services, was formerly an approval authority. It is
now at 209 CMR 50.09(3)(b)4.
 Electronic Financial Services: This provision is now at 209 CMR 50.09(b)5.
 Excess Capacity:
o Agreements Relative to Excess Capacity in Personnel: This provision is now at
209 CMR 50.09(3)(b)6.a.
o Sale of Lease of Excess Capacity in Data Processing Equipment or Services:
This provision is now at 209 CMR 50.09(3)(b)6.b.
o Sale or Lease of Excess Capacity in Facilities, Equipment, or Office Space: This
provision is now at 209 CMR 50.09(3)(b)6.c.
 Financial Counseling: This provision is now at 209 CMR 50.09(3)(b)7.
 Finder Activities: This provision, relative to offering products and services to
members through outside vendors, including but not limited to advertising space on
the credit union’s website, is now at 209 CMR 50.09(3)(b)8.
 Loan Related Products: This provision, relative to debt cancellation agreements and
debt suspension agreements, is now at 209 CMR 50.09(3)(b)9.
 Marketing Activities: This provision is now at 209 CMR 50.09(3)(b)10.
 Member Monetary Services: This provision is now at 209 CMR 50.09(3)(b)11.
 Operational Programs: This provision, which was formerly a notice provision
relative to payroll services, is now at 209 CMR 50.09(3)(b)12.
  Stored Value Products: This provision is now at 209 CMR 50.09(3)(b)13.
 Trustee or Custodial Services: This provision, which was formerly an approval
authority, is now at 209 CMR 50.09(3)(b)14.
- Approval Process for Additional Incidental Powers
 Expedited Approval Proc