Maryland Bank Commissioner Margie H. Muller, whose agency oversees state-chartered banks and credit unions, solicited money last year from a credit union to help pay for her assistant's trip to a conference in Hawaii.
The request came in a phone call from Ms. Muller to an executive at Baltimore-based MTA Employees Credit Union.
It has prompted an investigation into whether Ms. Muller violated state law by seeking money from a company her office regulates.
The funds -- about $1,300 -- were needed to send Assistant Commissioner Perry A. McAtee, who directly oversees state-chartered credit unions, to a conference of state regulators, according to credit union officials. The four-day conference was held in September at the Maui Marriott hotel.
In cooperating with Ms. Muller, the credit union's attitude was, "We treat you right, you treat us right," said its chief executive officer, Allan T. Moore Jr., who approved the decision to help raise the money. He added that after being told of the call by an assistant, "I didn't exactly appreciate it. I felt sort of a little bit taken advantage of."
This favor for the bank commissioner also came as the institutionwas operating under a state-imposed "cease and desist order," meaning that any significant management activities, such as paying dividends, had to be approved by Ms. Muller's agency.
The request put the institution in a difficult position, given the heightened state oversight, Mr. Moore said. "Generally [the order] means we're under their thumbs," he said.
Ms. Muller, who has served as bank commissioner for 11 years, acknowledged this week that her boss, Licensing and Regulation Secretary William A. Fogle Jr., has turned the matter over to the State Ethics Commission, which is investigating.
The commission is expected to decide if Ms. Muller, 66, violated the state's anti-solicitation statute, which generally prohibits state officials from requesting or receiving things of value from private companies or individuals.
Mr. McAtee referred questions to Mr. Fogle's office.
"I really can't comment on that, by law," Mr. Fogle said. "That's in front of the Ethics Commission." He would not say whether the commission was taking any actions.
In an initial interview early this week, Ms. Muller said: "I did not go toa couple of credit unions and request funds. That's absolutely false."
However, Ms. Muller did call one company directly, according to the officials at MTA Employees Credit Union.
About two weeks before the conference was to begin on Sept. 19, "Muller called me and asked if I could help out," said John Roycroft, MTA's secretary and assistant treasurer, who told Mr. Moore of the call. "I'm the one who organized it, got contributions from various state credit unions.
"Without exception, each of the credit unions thought it was important that our regulators attend the conference."
The companies pitched in a total of $1,268 to pay for Mr. McAtee's trip, according to Mr. Roycroft. Mr. Moore said the other contributors were Central Credit Union of Maryland Inc., in Towson, and the U.S. Coast Guard Yard Credit Union in Baltimore. Neither company returned calls seeking comment.
Of the more than 150 credit unions based in Maryland, most are federally chartered, while about 20 have state charters, which means their primary regulator is the state Bank Commissioner's Office. In that office, Mr. McAtee heads supervision of state-chartered credit unions. All three of the companies that contributed are state-chartered institutions.
Mr. Roycroft said he did not reveal which institutions gave money for Mr. McAtee's trip and was not asked. "Neither the bank commissioner nor Perry McAtee nor anyone else knew where the money came from," he said. "That way Perry, or whoever she sent, would not feel under any obligation" to the contributing credit unions.
MTA's cease-and-desist order, which remains in effect, is not prompted by concerns about the company's financial health, which is strong, executives said. The order covers various management practices, such as loan underwriting procedures and dividend payments, according to Mr. Moore.
"What I find most remarkable about this," Mr. Roycroft added, "is that the state cannot seem to find a few bucks in its own budget for this, an important training function."
Whether the current situation involving Ms. Muller and Mr. McAtee violated the state anti-solicitation law remains undetermined. Violation carries potential penalties ranging from a reprimand to court-imposed fines and termination.
State Ethics Commission Executive Director John O'Donnell said could not disclose or discuss the nature of any matters before the commission.
He said the commission typically attempts to determine the relationship of the regulator to the company; the nature of the benefits to the recipient; the legitimacy of the event; the amount of money involved and the way the payment was handled, among other factors.
Finally, the commission may consider the intentions of the officials, and their actions after the incident.
For her part, Ms. Muller said in a second interview this week, "I am waiting for advice from the Ethics Commission, and the matter is in their hands. I will do whatever they ask," she added, noting that she has been forbidden by the commission to comment further.
Ms. Muller became bank commissioner in 1983 after a long career in banking. She left Maryland National Bank in 1971 to join Union Trust Co., which later was acquired by Richmond-based Signet Banking Corp. She was senior vice president in charge of marketing by the time she left to join the state.
The way Ms. Muller funded Mr. McAtee's trip was unusual by industry standards, credit union officials said.
"The credit unions have a vested interest in being certain that the regulatory system is current," said Douglas Duerr, president and chief executive officer of the National Association of State Credit Union Supervisors (NASCUS), which sponsors the annual conference.
Before last year, the cost of attending the conference was paid for by NASCUS itself, because Ms. Muller and a former deputy commissioner were members of the board of the Arlington, Va.-based organization at different times. Last year was the first time the state became responsible for the cost.
"It seems to me if they really want someone to go, they ought to pay for it themselves," said Don Agee, president of the Maryland Credit Union League, a trade association representing about two-thirds of the credit unions in the state. "They claim they don't have the money in the budget to do it. That's why they asked the credit unions to do it."
Members of the credit union industry have occasionally helped pay for state regulators to attend educational seminars, according to Mr. Agee. But he drew a distinction between an educational function and the NASCUS annual conference.
"I don't really see anything wrong with it when you give a scholarship to somebody to go to a school to learn how to do their job better -- that benefits us," Mr. Agee said. "On the other side of the coin is the conference. That's another story."
The credit union league and its counterparts in other states pay for educational seminars by contributing to a nonprofit educational foundation, according to Mr. Duerr, of NASCUS. The foundation screens the applications of state regulators, chooses the ones who will attend, and pays their way from the pooled contributions.
Mr. Duerr said that pooling of funds is better than having contributors pay directly for their own regulator to attend a conference.
"The difference clearly would be a perception of a quid pro quo situation," Mr. Duerr said. "My preference would be to see a little more distance between the regulator" and the contributing credit unions.
Regardless of its lush location, the Hawaiian conference Mr. McAtee attended was a worthwhile endeavor, according to NASCUS and industry members.
The agenda included various workshops and forums on regulatory issues, both state and federal, as well as speeches by legislators, regulators, credit union executives and academics.
This year's conference is scheduled for Lexington, Ky.