NCUA Clears CEO of Potential Conflict

ALEXANDRIA, Va. – NCUA ruled last week that a federal credit union may issue a line of credit to a law firm in which the CEO’s husband is a partner. In a new legal opinion issued Friday, NCUA told Bayou FCU, in Baton Rouge, La., the agency’s member business loan rule bars FCUs from making business loans to senior officers and their immediate family members, in order to avoid conflicts of interest. However, the law firm where the husband of the CEO, Rhonda Linzy, is a partner, is organized a s professional law corporation, which establishes it as a separate entity from its partners, thereby making it permissible to issue it a loan, NCUA said. In order to protect against a possible conflict, the CEO must not be involved in the decision to issue the line of credit or its terms and should not communicate with staff and officials about the law firm’s application