State regulators in Vermont have ordered a credit union to quit calling what it does “banking” and a battle is under way.
The $600 million Vermont State Employees Credit Union said Wednesday that it under a cease-and-desist order issued June 18 by the state regulator to halt the use of “banking” and “bank” in all its advertising, marketing and communications copy.
The Montpelier credit union has filed an appeal and is hopeful a hearing will be held in the next four to six weeks.
- UPDATE, Oct. 8, 2012, Vermont Credit Union, Regulator Settle 'B' Word Dispute
The spat began in March when the 22-member Vermont Bankers Association first raised complaints over what it called “over the top use of banking in all their ads,” according to officials of the banking trade group.
The state’s Department of Financial Regulation agreed, saying the credit union erred by violating state law in using the word "banking" to describe the services offered by a regulated financial institution." said the credit union.
The credit union said it intends to “vigorously defend their right to freedom of speech and to advance credit union banking for all Vermonters.”
“We’re not sure where this issue will go from here. We’re prepared to follow this through to the end, regardless of how long it takes to ensure that we can continue to tell our story using a vocabulary that is simple, honest and commonly understood,” CEO Steven Post said in a written communication to VSECU members.
CUNA General Counsel Eric Richard said, “We agree with VSECU that the state regulator is taking an extraordinarily narrow view in its interpretation of state law on this matter, and its conclusion is impractical, illogical and detrimental. We believe the credit union’s appeal for further review should be granted. A reassessment is clearly in order.”
VSECU, the state’s second largest, noted that it is the only credit union with statewide field of membership in Vermont and believes it is "being unfairly targeted in a battle with banks," it said in a press release. The DFR oversees both state-chartered banks and credit unions in Vermont.
Chris D’Elia, president of the VBA, said he realizes his trade group is charting new ground but that for the moment the issue is local in that the Montpelier credit unions has long over-reached and a current campaign crosses the line.
The VBA said also at least four of its members which were not identified had written to the governor seeking redress as part of the legal proceedings now before the DFR.
D’Elia said he is now seeking national support from the ABA.