On June 18, 2012, the Vermont Department of Financial Regulation served VSECU (Vermont State Employees Credit Union) with a formal “notice of intent” that it will issue a cease-and-desist prohibiting the credit union from using the words “bank” and “banking” in its marketing, communications and advertising.
The battle erupted back in March over a disagreement about who can- and cannot use the word “banking” to describe services offered by state regulated financial institutions. The Vermont Bankers Association asserts in its complaint that VSECU has used the terms “bank” or “banking” to describe itself on a number of occasions. Vermont bankers take particular issue with VSECU’s references to being a “banking cooperative.” Among the language bankers find offensive:
- “We are a not-for-profit banking cooperative.”
- “At VSECU, we’re making banking a little more exciting.”
- “It’s another example of how VSECU is redefining banking.”
The credit union’s tagline is “Redefining Banking.”
VSECU, the only credit union chartered with a state-wide field of membership, believes it is being unfairly targeted in a battle with banks. The credit union has filed an appeal on the issue and is waiting for a hearing to be scheduled. You can read their complete legal response here.
Watching One’s Language, Banking Edition
Regulators may have cause to limit use of the word “bank” as a noun. But to try and limit its use as a verb seems a bit beyond reason. As written, regulators are telling VSECU that they couldn’t make statements like, “We’re a better alternative to banking,” or “If you don’t like where you bank, switch to VSECU” — how is that not an unconstitutional restriction on free speech? The verbs (to) “bank” and “banking” are concepts that transcend a single industry. “Bank” (as a verb) is more generally understood to mean “save” or “deposit,” or more specifically to manage one’s core finances. When consumers say, “I bank with XYZ Financial,” that’s what they mean.
This point is not lost on Vermont’s Department of Financial Regulation, who uses the term “banking” liberally throughout its website when refering to the activities of both banks and credit unions. There is an entire “Banking” tab used as a catchall for banks and credit unions. The chief regulator for both banks and credit unions is the Deputy Commissioner of the Vermont Banking Division. Its newsletter is called the “Banking Bulletin.” If you have a complaint about a bank or credit union, you call the “Consumer Banking” hotline. And here’s an excerpt that perfectly captures the Vermont DFR’s hypocrisy:
“The Vermont Banking Division regulates and examines a variety of entities that include banks, credit unions, lenders, mortgage brokers, sales finance companies, debt adjusters, and money servicers. The mission of the Banking Division is to protect consumers, regulate banking activities in Vermont, ensure soundness and stability of financial services providers, promote competition and availability of financial services, and educate the public.”
Reality Check: It sounds like pretty much everyone agrees what “banking” is… except bankers, that is.
Where Does the Line Get Drawn on Such a Slippery Slope?
Trying to limit the use of words based on context and intent is a very, very slippery slope. Yet the way the cease-and-desist order was written, VSECU might have to cough up $15,000 for calling Presidents Day a “bank holiday.” Using the common cliché, “You can bank on it,” could be punishable. Telling people they could compare loan APYs at BankRate.com would be a no-no. There would be no “bank shots” in billiards. Jet planes couldn’t “bank sharply.”
Heck, a VSECU rep couldn’t even ask a prospective member, “Where do you currently do your banking?” because that might imply VSECU sees itself as a “banking” equivalent.
Key Questions: What about “online banking?” Or “mobile banking?” Why should VSECU’s use of these common, socially-accepted, industry-wide terms be restricted, when practically every other credit union in Vermont (and the rest of the world) can use these words with impunity? Where does one draw the line?
If bankers really want to wage this fight, they’ll be engaging in a petty political game at the expense of their own image and reputation. There is no attractive way they can spin it to the public. Bankers might win the (legal) battle, but they’ll end up losing the war of public opinion either way. They could easily wind up looking like a bunch of fascist bullies, snickering and twisting their mustaches as they trounce the First Amendment.
This conflict really all traces back to the tax-exempt status that credit unions enjoy and bankers detest. Bankers feel like if credit unions can use banking terminology, they should be taxed like banks. It’s a spurious argument, since tax exemptions are granted based on who an organization serves, not what service(s) the organization provides. (Further reading: Why Are Credit Unions Tax Exempt? Do You Really Know?)
Reality Check: Banks don’t want credit unions using b-words, and there are plenty of credit unions who think along the same lines. But like it or not, people are going to call it “banking” and all parties (including regulators) need to just get over it.
If The World Hands You Lemons, Make Lemonade
As undesirable as this situation may be for VSECU, it could be exploited for marketing purposes. VSECU’s staff could have a lot of fun rubbing bankers and regulators raw by flirting just outside the confines of the cease-and-desist.
For instance, one headline might read, “Vermont State Wants You to Stop Banking!” The copy could go on to explain that VSECU, as a credit union, is a better alternative for managing one’s household finances, and in fact, is something so distinct from “banking” that the state doesn’t even want the credit union to call it that.
Another possible VSECU headline: “What four-letter financial word is so foul and dirty, the State of Vermont won’t even let us use it? Hint: It starts with a ‘b’ and rhymes with spank, dank and stank.” Oh how the regulator would just loooove that campaign — lots of lolz. Buy hey, the state just told VSECU to not use the words “bank” or “banking” as a verb to describe itself. Okay jerkwads, we won’t…
VSECU could run a great bank-bashing campaign. “Tell your blankety-blank bank what you think of them.” As long as VSECU doesn’t try to make itself sound like it’s a bank or that it offers banking services, it’s fair game. So VSECU can go ahead and use the b-word when referring to its competitors, because that’s what they are — no, not “babies,” not “bullies” but “banks.”
Or VSECU could have a field day with word play — just swap the word “blank” for “bank,” and “blanking” for “banking”:
“Money makes people do silly things. Take all those big blanks with bazillions in assets. The big blanks are so afraid that if you knew the truth about VSECU, you’d switch and do all your blanking with us. Sound crazy? Then why is the Vermont Blankers Association complaining to state regulators whenever we use the word ‘blank’ or ‘blanking.’ Now we’re not supposed to say those words anymore. Think about it. Online blanking. Mobile blanking. Telephone blanking. Ridiculous, huh? Whatever you want to call it, don’t worry… we’ve got all your blanking needs covered, and there’s nothing those big bad blanks can do to stop us.”
A series of billboards could taunt bankers and regulators with some double-reverse psychology:
- “At VSECU, we’d never call ourselves bankers. As if…?!”
- “At VSECU, we’re not doing anything like banking. But it sure works for 50,000 of your neighbors.”
VSECU could rename the street its HQ sits on from “Bailey Avenue” to “Banking Way.”
There would be a million ways to circumvent regulators if VSECU wanted to press the issue. Hopefully regulators will wake up and smell the First Amendment before any of this gets (any further) out of hand.