State regulators in Vermont have ordered a credit union to quitcalling what it does “banking” and a battle is under way.

The $600 million Vermont State Employees Credit Union saidWednesday that it under a cease-and-desist order issued June 18 bythe state regulator to halt the use of “banking” and “bank” in allits advertising, marketing and communications copy.

The Montpelier credit union has filed an appeal and is hopeful ahearing will be held in the next four to sixweeks.

• UPDATE, Oct. 8, 2012, Vermont Credit Union, Regulator Settle 'B' WordDispute

The spat began in March when the 22-member Vermont BankersAssociation first raised complaints over what it called “over thetop use of banking in all their ads,” according to officials of thebanking trade group.

The state's Department of Financial Regulation agreed, sayingthe credit union erred by violating state law in using the word “banking” to describe the services offered by a regulatedfinancial institution.” said the credit union.

The credit union said it intends to “vigorously defend theirright to freedom of speech and to advance credit union banking forall Vermonters.”

“We're not sure where this issue will go from here. We'reprepared to follow this through to the end, regardless of how longit takes to ensure that we can continue to tell our story using avocabulary that is simple, honest and commonly understood,” CEOSteven Post said in a written communication to VSECU members.

CUNA General Counsel Eric Richard said, “We agree with VSECUthat the state regulator is taking an extraordinarily narrow viewin its interpretation of state law on this matter, and itsconclusion is impractical, illogical and detrimental. Webelieve the credit union's appeal for further review should begranted. A reassessment is clearly in order.”

VSECU, the state's second largest, noted that it is the onlycredit union with statewide field of membership in Vermont andbelieves it is “being unfairly targeted in a battle with banks,” itsaid in a press release. The DFR oversees both state-charteredbanks and credit unions in Vermont.

Chris D'Elia, president of the VBA, said he realizes his tradegroup is charting new ground but that for the moment the issue islocal in that the Montpelier credit unions has long over-reachedand a current campaign crosses the line.

The VBA said also at least four of its members which were notidentified had written to the governor seeking redress as part ofthe legal proceedings now before the DFR.

D'Elia said he is now seeking national support from the ABA.