LINCOLN, Neb. — Credit unions have won a battle of semantics in Nebraska to allow them to use the term "banking" to describe their business.
The Nebraska Attorney General's office has ruled that Nebraska statute is pre-empted by NCUA regulation that permits credit unions, without distinction of the chartering authority, to use the term "banking" to describe a business activity. Additionally, express provisions in another part of state law extends the same rights, powers, privileges, and immunities of federal credit unions to state chartered credit unions as well.
Nebraska Credit Union League President/CEO Scott Sullivan said the group "is extremely pleased with the Attorney General's opinion. Our association had a growing concern over the unwarranted and unnecessary protection of the term banking when it was used to describe a business activity of a federally insured financial institution. The use of the term by credit unions is neither intended to confuse nor mislead. Rather, credit unions merely wanted to use the term as a practical matter in the ordinary course of commerce to describe commonplace activities such as online or home banking."
The result came after more than a year of legislative effort, which had been opposed by the banking community.
To ensure parity between Nebraska's 53 federally chartered credit unions and its 22 state charters, the league pushed for legislation in 2006 (LB 1250) to expressly allow state-chartered credits to use the term "banking" to describe a business activity. The effort failed to get out of committee due to strong opposition from the banking industry.
A similar amendment offered by the league to an existing bill this year did not make it in. But after league testimony on the legislation, the Nebraska Department of Banking & Finance raised questions as to whether federal credit unions could use the term "banking" and the attorney general subsequently issued this opinion. –scooke@cutimes.com
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.