Post: Banking on common sense

Editor’s note: This op-ed is by Steven D. Post, the CEO of the VSECU.

The Vermont Department of Financial Regulation (DFR) has issued VSECU a notice of intent to serve us a cease and desist order that would stop us from using the words “banking” and (to) “bank” as part of our vocabulary. They are concerned that you, the consumer, will be confused and not understand that you are doing your banking at a credit union rather than a bank.

VSECU believes Vermonters are smarter than this.

Under Vermont statute, Title 8 V.S.A. 14103, the commissioner of the DFR has the authority and discretion to acknowledge that the word “banking” is commonly understood and that its usage by a regulated institution, such as VSECU, does not confuse or mislead the public. Since he has not chosen this simple solution, one is left to presume the commissioner has evidence that consumers are confused by our advertising.

If he has such evidence, we have not seen it.

For the VBA to believe that Vermonters might be confused is almost laughable, when indeed, the DFR itself regulates both Vermont credit unions and banks through their own office named the “Banking Division.”

What we do know is that it is clear that pressure from the Vermont Bankers Association (VBA) is the force behind this action. The VBA has pressured the DFR to take this action and has solicited support from at least seven banks in a letter-writing campaign to the governor, requesting that the administration support the action of the commissioner.

For the VBA to believe that Vermonters might be confused is almost laughable, when indeed, the DFR itself regulates both Vermont credit unions and banks through their own office named the “Banking Division.”

Illogical as this action may seem, this has turned into a serious matter. While I respect the work and diligence of the DFR staff in protecting Vermont consumers, I challenge them to demonstrate that their action is consumer-focused rather than a reaction to the Vermont bankers. One negative impact I see in all of this is the potential cost to Vermont taxpayers, who could be left paying VSECU’s legal expenses if DFR’s position is deemed unconstitutional by the court.

Banks and credit unions both bring value to individuals and communities. Both offer banking services such as deposits, savings, credit, mortgages, banking online, and much more. Our business model is fundamentally different and the VBA and the DFR know it. Credit unions are not-for-profit alternatives to the for-profit banks. It’s good that consumers have choice!

The commissioner of DFR suggests that if VSECU uses the word “banking” in our advertising, we should then be labeled a bank, treated as a bank and taxed as a bank. That’s a way of trying to back door the taxation issue and it raises concern about the real motivation behind banker complaints. Is this about protecting banks and taxing non-profit cooperatives?

The Vermont Bankers Association is distorting a system designed for consumer protection to attack their competition and attempt to limit consumer choice. The VBA says it is fed up with our “over the top” advertising. I’m not sure what that means but can only assume that our advertising is working to help educate and heighten consumer awareness that VSECU is a different kind of banking experience.

This issue is about being honest, open and clear about who we are and what we do. We have never called ourselves a bank in any of our advertising. We have never attempted to deceive, hide, pretend or misconstrue who we are. I don’t believe anybody could see, hear or read a VSECU advertisement and be confused about whether we are a bank or a credit union.

Silencing us by forbidding us from using a commonly understood word used by credit unions and banks throughout the U.S. serves no valuable purpose to Vermont consumers. When a regulator begins to dabble into the constitutional rights of freedom of speech, everyone should take notice.

We believe that the DFR needs to put common sense and Vermont consumers ahead of the interests of the Vermont Bankers Association and discontinue this misguided enforcement action.

VSECU is proud to be a credit union.

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  • I will continue to do my banking at One Credit Union – for that matter I now feel obligated to make sure I tell folks “I do my banking at my credit union.”

    Funny – never felt any need to do that before unless it was a natural topic of conversation.

  • Avram Patt

    Our household has two VSECU memberships.

    Once upon a time, I banked with a long-established local Barre bank named after a certain local rock. That bank was swallowed up by a bigger bank which was in turn swallowed up again. I no longer remember the current name of whoever owns what’s left of the bank that no longer exists that gave us a mortgage on our house in 1989. When there was an opportunity to refinance a few years later, we did that with VSECU, where we were already doing all our other “BANKING.”

  • Barry Kade

    It seems that your “false advertising” may also have fooled the U.S. Supreme Court. Back in 1998, the Court decided the case of National Credit Union Authority v. First National Bank and Trust Co., et al.,522 U.S. 479. The Court wrote:
    ” Because federal credit unions may, as a general matter, offer banking services only to members,. . .”

    I hope the credit union will stand up to the bankers and their lackeys in State government. Give ’em hell!

  • Ron Pulcer


    “The commissioner of DFR suggests that if VSECU uses the word “banking” in our advertising, we should then be labeled a bank, treated as a bank and taxed as a bank.”

    If you search the websites for any member bank of VT Bankers Association, you will find that they all use the word “credit” quite a bit.

    To be fair, shouldn’t the VT Dept. of Financial Regulation issue a “cease and desist order” to banks using the word “credit” in their advertising and websites, since it might “confuse” potential customers?

    As a VSECU member, I have noticed in the past that VSECU uses/used the phrase “Redefining Banking” on their website. But isn’t that exactly what a credit union is. A credit union redefines banking in a more democratic form (member ownership versus stockholders). I don’t see anything misleading about the phrase “redefining banking”.

    It seems that the bankers either want to impose tax on credit unions or they want to hassle them through legal fees, which will impact customers. So much for consumer protection!

  • What are the Dough Boys afraid of? I’m banking on my Credit Union.

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