PEWAUKEE, Wis.–Wisconsin’s state-chartered credit unions can continue to use the word “bank” and variations on the word without violating any laws, according to an opinion letter from NCUA.
The letter, sent in response to an inquiry from the Wisconsin Credit Union League, clarifies use of words such as “banking” by state charters. The league noted there had been conflicting interpretations between federal and state regulators on whether the SCUs in Wisconsin could use the words. The Wisconsin Department of Financial Institutions had disapproved of usage of the words, citing Wisconsin banking and advertising laws, according to the league. NCUA had held that FCUs can use such commonly understood, generic terms under federal advertising laws.
Now the new opinion letter from NCUA said it’s also appropriate for federally insured state charters in Wisconsin, as well.
"NCUA rarely issues opinion letters – just a handful last year alone. But we went after this to put to rest a legal question that resulted in three state-chartered credit unions in our state receiving cease-and-desist letters last year," said Paul Guttormsson, league vice president, legal and compliance, in a statement. "Credit unions should be free to invite consumers to 'do your banking here.' That doesn’t mislead anyone about the differences between non-profit credit unions and for-profit banks. With this letter, all Wisconsin credit unions have clarity.”
In the letter, NCUA concludes both the Wisconsin’ banking law on the use of the term and Wisconsin’s Deceptive Trade Practices Act are preempted by the NCUA’s advertising rule. This response provides needed clarity for Wisconsin’s credit unions, three of whom were directly affected by a state opinion prohibiting use of the term “bank” by any entity other than a state-chartered bank, the league said.
“We are grateful for the actions of the NCUA and the input from Wisconsin Governor Scott Walker’s administration that helped achieve a practical and effective solution, which provides clarity to the benefit of Wisconsin’s credit unions and also consumers,” said League President and CEO Brett Thompson.