The Vermont showdown over whether a Montpelier credit union can keep on using “bank” and “banking” in its advertising appears headed a for a lengthy legal slog and perhaps compromise following the start of hearings last week by the state regulatory agency.
- UPDATE, Oct. 8, 2012, Vermont Credit Union, Regulator Settle 'B' Word Dispute
In a preliminary 30-minute session conducted in a Montpelier Capitol conference room, the Vermont Department of Financial Resources and the $600 million Vermont State Employees Credit Union, now the object of a proposed cease and desist order, began initial discussions, primarily administrative, before Hearing Officer Robert Simpson, who was appointed by Vermont regulator.
Simpson ordered Vermont State Employees attorneys and the department to hold settlement discussions with a goal of narrowing or eliminating the issues that separate them by Oct. 24, the tentative date for the next hearing.
The legal issues, as cited by Simpson, were not precisely defined but at the center of the proposed cease and desist order is a 1969 Vermont law that bars any other financial institution other than a bank from using bank identifiers in ads.
Since June and the regulator’s initial cease and desist intent petition, Vermont State Employees has been the principal target of a campaign led by the Vermont Bankers Association to force the Montpelier credit union to stop calling itself a “banking cooperative.”
The Association of Vermont Credit Unions supported by CUNA has fought back calling the clampdown outlandish based on common everyday usage.
Earlier last week, Stephen Kimbell, Vermont commissioner and head of the Department of Financial Resources, which supervises both banks and credit unions, suggested all of the parties might look toward an eventual compromise to avoid litigation and wasting of taxpayer money.
Steven Post, president/CEO of VSECU, has vowed to fight the cease and desist order, but he declined to immediately comment on the Wednesday hearing.
The day before the hearing, Vermont regulator said he remains open to any kind of settlement or compromise regarding a proposed cease-and-desist order.
Kimbell stressed that pre-hearing conference was one devoted to scheduling, witness lists and legal issues but that “in any kind of proceeding like this, we always welcome settlement offers should they arise.”
Kimbell said he has no direct knowledge that one might be coming from any of the parties. Apart from his office and VSECU, on an informal basis interested parties have included the Association of Vermont Credit Unions, the Vermont Bankers Association and Occupy Burlington.
The bankers association has acknowledged its active role in pushing forward the clampdown on VSECU for using “banking cooperative” in its TV and online ads.