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.
