DES MOINES, Iowa–Iowa’s largest credit union said it is considering a name change as the result of language that appears in legislation passed by the state’s legislature.
Although Iowa’s credit unions were successful in fighting off a tax proposal in the just-completed legislative session, “Iowa lawmakers did take aim at the state's largest credit union, the University of Iowa Community Credit Union, through a major budget bill,” noted the Des Moines Register. “End-of-the-session appropriations legislation included a provision banning Iowa credit unions from using the names of state universities in their titles.”
As CUToday.info reported here, in March some members of the Board of Regents for the State of Iowa voiced concerns that consumers are confused over differences between the University of Iowa and the credit union with the same name. Critics also said UofI CCU unfairly competes for business by using the name of the university. As CUToday.info also reported here, one of the Regents who was critical did not disclose he is part owner of a bank in the state.
According to the Des Moines Register, Sen. Charles Schneider (R-West Des Moines), who is chairman of the Senate appropriations committee, said lawmakers included the new rule to officially separate the credit union's name from that of the University of Iowa.
"Just as a good business practice, we think it makes sense that they change to a name that doesn't infer or imply that they're somehow related to the university," he was quoted as saying.
Credit Union’s Response
Jeff Disterhoff, president and CEO of the $4.8-billion University of Iowa Community CU, told the Des Moines Register, "It struck us as a somewhat unusual provision to be thrown in at the last minute. Most of the conversation leading up to this point involved income taxation at the state level. So it would seem at least plausible that this provision was a way to placate the banking industry in the state of Iowa."
The law goes into effect April 30, 2019 and charges the Iowa Department of Revenue with enforcing it.
According to the Register, Disterhoft said the UICCU board will consider its options over the next few months. The credit union can either change its name or challenge the law.
Disterhoft told the Des Moines Register the language in House File 2502 left some room for debate.
The law says credit unions "shall not include the name of any public university located in the state in its name." But it specifies that means "the State University of Iowa," the school's original title, the Register reported.
A Technicality
"We technically don’t have the University of Iowa’s name," Disterhoft told the Register. "Its legal name is State University of Iowa. So there's some ambiguity with whether or not we truly have their name."
John Sorensen, president and CEO of the Iowa Bankers Association, told the Des Moines Register the credit union's name is "deceptive," because it has no official ties to its namesake university.
In 2007, UICCU attempted to change its name to Optiva Credit Union, but that move was rejected in a member vote.