An Ethics Commission opinion has been requested as to whether a conflict of interest is presented by the continued membership on the Bank Regulations Board of a person who serves as the Vice President of a Savings and Loan Association.

This request is presented by the Secretary of Licensing and Regulation (DLR) on behalf of a member (the Member) of the Bank Regulations Board (the Board). The Member, who is a CPA who fills the position on the Board required to be held by a CPA, is also the Vice President of a Federal Savings and Loan Association (the Association). He expresses concern about the possibility of a conflict of interest since recent changes in the bank laws allow savings and loan associations to have "NOW" checking accounts. His Association could therefore be developing services competing with those of banking institutions regulated by the Board. His Association, it should be noted, is Federally chartered.

The Board has authority over banking institutions, which include State banks, trust companies, and savings banks. Savings and loan associations are not banking institutions under the Financial Institutions Article of the Annotated Code of Maryland (§1-101(d)). The Board thus has no authority over savings and loan associations and its authority over the banking institutions it does regulate appears to be relatively limited. It deals primarily with approval of affiliates and approval of additional banking or bank-related activities for banking institutions similar to those allowed for national banking associations. It does not appear to regulate the banking activities that may involve competition with savings and loan associations. (Fin'l. Inst. Art., §5-401—5-404, 5-504, Annotated Code of Maryland.) Savings and loan associations in Maryland are not regulated by the Bank Regulations Board; they are under the authority of the Savings and Loan Division in the DLR.

The provisions of the Public Ethics Law (Article 40A, Annotated Code of Maryland) that are potentially applicable to this request are sections 3-101, the disqualification provisions, and 3-103(a), the interest and employment prohibitions. Section 3-101 prohibits non-ministerial participation by an official in any matter in which he or certain relatives has an interest, or in which certain business or other associates are involved as parties. Section 3-103(a) prohibits an official from having an interest or employment relationship with any entity that is under the authority of or has contractual dealings with his agency.

However, given the regulatory structure of the banking industry and the financial institutions involved here, application of either of these provisions to the Member's situation would appear to be unlikely. The Association in which he serves is a Federally chartered entity not in any way regulated by a State Board in DLR. Since there is no DLR or Bank Regulations Board jurisdiction over his Association, it is difficult to conceive of a situation where the Member would have to disqualify himself from participating in a matter in which he has a personal interest or in which the Association would be involved as a party. Nor does there appear to be any regulatory or contractual relationship between the Association and either the Board or DLR that would bring this situation under §3-103(a). We therefore conclude that the situation presented by the Secretary of DLR is not a conflict of interest under §3-101 or 3-103(a) of the Public Ethics Law.

Herbert J. Belgrad, Chairman Jervis S. Finney
    Reverend John Wesley Holland
    Barbara M. Steckel

Date: May 4, 1981