AGO 88-9.

• Case Date: December 12, 1988
• Court: Colorado

Colorado Attorney General Opinions 1988. AGO 88-9. December 12, 1988Department of Law Attorney General Opinion FORMAL OPINION of DUANE WOODARD Attorney General Opinion No. 88-9 AG Alpha No. RG SL AGAQX David L. Paul Commissioner Division of Savings and Loan State of Colorado 1560 Broadway, Suite 705 Denver, Colorado 80202 RE: Applicability of Section 18-5-210, C.R.S. (1986) to savings and loan associations operating in Colorado.Dear Mr. Paul: This opinion letter is in response to your November 1, 1988, letter in which you inquired about the applicability of Section 18-5-210, C.R.S. (1986) to savings and loan associations operating in Colorado. Section 18-5-210 prohibits an officer, manager, or other person participating in the management of a financial institution from knowingly receiving or permitting receipt of a deposit if he or she knows that the institution is insolvent. QUESTIONS PRESENTED AND CONCLUSIONS Your request for an attorney general's opinion presents the following questions: Whether officers and managers of an insolvent federally-chartered savings and loan association may be criminally prosecuted by the State under Section 18-5-210, C.R.S. (1986) for accepting deposits? No. Whether officers and managers of an insolvent state-chartered savings and loan association may be criminally prosecuted by the State under Section 18-5-210, C.R.S. (1986) for accepting deposits? Yes, unless they are doing so pursuant to the terms of an agreement, authorized by federal law, between the institution and the Federal Home Loan Bank Board. ANALYSIS A dual banking system, consisting of state and national banks and state and federal regulatory authorities, has been in existence in the United States since 1791, when the First Bank of the United States was chartered. Competing state and federal interests have caused significant changes through the years, but states have traditionally had a significant role in the regulation of banks and other financial institutions. SeeNational State Bank v. Long, 630 F.2d 981 (3d Cir. 1980). Laws passed by Congress in the early 1930s established the current structure of federal regulatory authority over savings and loan associations. In 1932, the Federal Home Loan Bank Act, codified at 12 U.S.C. Sections 1421 to 1449 (1982), created the Federal Home Loan Bank Board (hereinafter "FHLBB") and established a hierarchial federal system to supervise the savings and loan industry. The system consists of the FHLBB, regional Federal Home Loan Banks, and the Home Loan Banks' member institutions, which may be federally-chartered or state-chartered savings and loan institutions. In 1933, The Home Owners' Loan Act, codified at 12 U.S.C. Sections 1461 to 1470 (1982) (hereinafter "HOLA"), authorized the FHLBB to provide for the organization, incorporation, examination, operation, and regulation of federal savings and loan associations. In 1934, The National Housing Act, codified at 12 U.S.C. Sections 1701 to 1706 (1982), created the Federal Savings and Loan Insurance Corporation (hereinafter "FSLIC") and placed it under the authority of the FHLBB. The FSLIC insures funds deposited with all federally-chartered savings and loan associations and those state-chartered savings and loan associations which elect to become insured,(fn1) and administers insurance payouts and liquidation procedures if an insured institution fails. The FHLBB was given authority to issue rules and regulations which it deemed necessary to carry out the purposes of the National Housing Act. See 12 U.S.C. Sections 1725(a) , 1730 (e) and (m) (1982). The FHLBB has, in fact, promulgated a great many regulations concerning the operation of savings and loan associations. One such regulation, which deals with regulatory capital requirements, provides: Failure to meet regulatory capital requirements. If an insured institution fails to meet...