NCUA Board Member Asks Vermont CU Regulator: Are You Really Serious?
The recent decision by the State of Vermont Department of Financial Regulation ordering the Vermont State Employees Credit Union to stop using words such as "bank" and "banking" in its marketing, communications and advertising begs the question, are you really serious?
Regardless of where one "engages in receiving, lending, exchanging, and safe guarding money," it is called "banking" as defined in the Random House Dictionary. So whether it's done at a place that uses "bank" in their name or one that calls itself a savings and loan or perhaps at a credit union, it's all one and the same.
Banking is to financial institutions like a hamburger is to McDonald's, Burger King, Wendy's and every place else that sells them.
Banking is what credit unions do, and in some cases they do it better than financial institutions with bank in their name.
Over the course of time, the use of certain words that are commonplace in the English Language cause them to be referred to as generic, often used, means the same thing or clearly understood. The courts of this country have on numerous occasions ruled that some words are so generic or commonly used that no one person or entity can claim it solely as theirs.
Aspirin, cough drops, hamburgers, banks and banking, all are generic and are not protected by trade mark regulation, as they should not be.
When a financial regulator decides to prohibit the use of generic words it makes you think of what President Ronald Reagan once said, "the nine most terrifying words in the English Language are 'I'm from the government and I'm here to help.'"
I fully understand what President Reagan meant but in this case, I say to the Vermont State Employees Credit Union, "I am from NCUA and we can help." Federally chartered credit unions can use terms like "bank" and "banking" because banking is what they do.
I was recently asked by a journalist, "What prompts a credit union to switch from a state to a federal charter?"
The answer is simple, a decision by a state regulator that does not make sense. You can take that to the bank.
Michael E. Fryzel, Board Member
NCUA, Alexandria, Va.