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Word Police Strike Vermont

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   By William Boardman  Email address removed"> Email address removed  


If you've been thinking a credit union is just another kind of bank, look out, because here come the State of Vermont to accuse you of language abuse, not yet a felony, but subject to civil penalties. 


More precisely, the Vermont Dept. of Financial Regulation decided in June that the Vermont State Employees Credit Union (VSECU) had to stop using the word "banking" to describe the activities of the credit union, even though many of those activities are identical to those performed by banks. 


The VSECU, whose website is headed "Redefining Banking," was started in 1947.  In the eyes of Financial Regulation commissioner Steve Kimbell, the 75 year-old credit union has been violating a 12-year-old statute (8 VSA 14103) which is designed to protect consumers against fraudulent representation in banking.  


Commissioner Kimbell's notice to VSECU to cease and desist in the use of the words "bank," "banking," and the like in its advertising.  He cites the relevant statute, which provides for the commissioner to allow such usage if he decides it will not confuse the public. 


In nine pages of legalistic argument, Kimbell's order parses a variety of statutes controlling the use of words like "bank" under state and federal law.  But nowhere in those nine pages, including the 7-page cease and desist order, does he cite a single instance of consumer confusion.  Nor does he cite the abstract possibility of consumer confusion.  Kimball's order is based on the narrowest possible reading of the statute.  


VSECU defines itself as a "Not For Profit Banking Cooperative."  What that could be changed to, without confusing consumers, commissioner Kimbell doesn't say.  Perhaps "not for profit entity that does deposits, checking, loans, and other stuff like that that we can't, by law, describe accurately cooperative" would meet the commissioner's standards, but it's hard to see how it wouldn't be more confusing.!/tab/history  


VSECU is already concerned about the possible confusion from its present designation as a "not for profit banking cooperative," noting immediately afterwards:  "That's a mouthful and we know that most people don't really think about the significance of our structure when looking for the best banking options. But it really is our structure -- being member-owned cooperatively and existing not to make a profit -- that enables us to be a better banking option for you." 


Not surprisingly, VSECU has appealed commissioner Kimbell's order.  In a preliminary hearing on August 22, attorneys for the parties asked for time to reached a negotiated settlement.  The hearing officer granted the request. 


Steve Kimbell was a lobbyist until 2011, one of four partners in Kimbell, Sherman & Ellis, now KSE, in Montpelier, the state capitol.   Self-styled as "the premier Vermont lobbying firm," KSE has been lobbying government, and providing people to hold government offices since 1973.  Kimbell has said that "influencing the government" is a great way to make a living."   KSE partner Kevin Ellis declined to say what banking clients the firm has had, if any.    and   


VTDigger broke the story of the Vermont language police in mid-July, a month after commissioner Kimbell initiated his action, when VSECU lodged its appeal.  The story drew a host of posts, largely mocking or suspicious of Kimbell, or both.  One writer wondered what he was now supposed to call river banks, another fretted over food banks. 


Yet another, Vermont Law School professor Donald Kreis, quoted Kimbell's apparent bias in favor of commercial banks, as reported in the Bare Times Argus: "If I'm a state-chartered bank and I pay the bank franchise tax and I'm in competition with a credit union providing very similar services, I think I'd take exception if they started pitching themselves as a place to do banking . . . .If the credit unions want to pay the franchise tax, they can go ahead and do that." click here;


Kreis later posted an op-ed on VTDigger that the VSECU put on its own website. 

Kreis's piece is a two-page, piece-by-piece takedown of commissioner Kimball's case.  Kreis concludes: "On the merits, Kimbell should leave credit unions alone." 


Kreis also notes that, while Vermont may have more cooperatives than any other state in the union, the country's oldest credit union is in New Hampshire.  Its name is St. Mary's Bank.  

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Vermonter living in Woodstock: elected to five terms (served 20 years) as side judge (sitting in Superior, Family, and Small Claims Courts); public radio producer, "The Panther Program" -- nationally distributed, three albums (at CD Baby), some (more...)
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