ALEXANDRIA, Va. – Credit unions cannot offer better loan rates to its officials than it does any regular member.

People's Credit Union (Middletown, R.I.) President and CEO Ellen N. Ford asked NCUA hypothetically whether an employee, who also serves as a credit committee member, is eligible for the same 1% discount on loan rates given to all employees who have been with the credit union more than a year.

NCUA Associate General Counsel Sheila Albin wrote in legal opinion letter 06-0343, "Credit union employees may receive reduced loan rates, but the rates for officials must not be more favorable than comparable loan rates to other credit union members. Officials include any member of the board of directors, credit committee, or supervisory committee. The rule prohibits preferential treatment of officials regardless of whether they are employees or receive compensation. The rule intends to limit insider dealing and would not be effective if employee-officials could receive preferential loan rates as a part of their employee compensation."