WILLIAM DONALD SCHAEFER, Governor

The Honorable R. Clayton Mitchell, Jr.
Speaker of the House of Delegates
State House
Annapolis, Maryland 21401

Dear Mr. Speaker:

In accordance with Article II, Section 17 of the Maryland Constitution, I have today
vetoed House Bill 356.

This bill would prohibit any state-chartered credit union from extending any loan, line
of credit, or letter of credit for a commercial, corporate, business or agricultural
purpose.

The Maryland Credit Union League, Inc., representing the state-chartered credit
unions in Maryland, has requested that I veto the bill. The League points out that the
proposed restriction on lending by the 20 state-chartered credit unions is not applicable
to the 167 federally chartered credit unions operating in Maryland. The bill, if signed
into law, would place the state-chartered credit unions at a distinct disadvantage with
the federally chartered credit unions. I agree with this view.

No abuse by state-chartered credit unions in making business loans to their members
has been brought to my attention. Unlike banks or savings and loans, credit unions may
only loan money to their members. The Bank Commissioner, who has supervisory
authority over the state-chartered credit unions, has reviewed the situation and
proposed regulations designed to further ensure that credit unions continue to be
managed in a safe and sound manner. Those regulations include appropriate
restrictions on member business loans rather than the absolute and unnecessary
prohibition on such loans House Bill 356 would require.

For these reasons, I am vetoing House Bill 356.

Sincerely,

William Donald Schaefer

Governor

House Bill No. 356

AN ACT concerning

Credit Unions - Business Loans

FOR the purpose of prohibiting credit unions from making loans for commercial,;
corporate, business, or agricultural purposes; imposing certain criminal and civil
penalties for making loans for commercial, corporate, business, or agricultural
purposes; defining a term; and generally relating to loans made by credit unions.,

BY repealing and reenacting, without amendments,
Article - Financial Institutions
Section 6-501

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