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Vt credit union fights to use the word banking - WCAX.COM Local Vermont News, Weather and Sports-

Vt credit union fights to use the word banking

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MONTPELIER, Vt. -

It's the four-letter word the state doesn't want credit unions to use.

"It's common language commonly understood and everybody knows what it means," said Steve Post, CEO of the Vermont State Employees Credit Union.

Post received a cease and desist letter from the Department of Financial Regulation, telling the credit union to stop using the words bank or banking in advertisements.

"They are not allowed to use banking terminology and shouldn't be using it. It's plain and simple," said Chris D'Elia, the executive director of the Vermont Bankers Association.

State statute is on Chris D'Elia and the Vermont Bankers Association's side. But Post argues it's the difference between a noun and a verb.

VSECU argues the term banking is so common that if you were to go up to the average member and ask, what type of services do you receive here? They would answer banking.

"Banks are obligated to pay an income tax to the federal government and they have to pay a franchise tax in the state of Vermont. Credit unions do not pay either of those, so that's a big difference," D'Elia said.

D'Elia says credit unions were originally mom and pop-type of businesses in Vermont. Back in the 1940s, assets for credit unions totaled roughly $1,000-- that's one of the reasons why they were exempt from taxes big banks pay. Now, credit unions are more competitive. Their total assets in Vermont are close to $1 billion, but they still don't pay the same taxes. What's more confusing? Federal credit unions can use this terminology.

"The NCUA, which regulates federally chartered credit unions, ruled on this years ago that the use of the word banking was not disallowed, it was OK," Post said.

If the use of the word bank is limited, would children store money in piggy blanks? Or head to the local food blank? One thing is certain-- VSECU and the Bankers Association are prepared to go to court for this issue, which is bound to be a pricey endeavor, you can bank on it.

A prehearing for VSECU with the Department of Financial Regulation is scheduled for the end of August.

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