MADISON, Wis.–The Wisconsin Bankers Association said it “vehemently disagrees” with an NCUA opinion letter that found credit unions continue to use the words “bank” and “banking” as they conduct business, arguing state law cannot be pre-empted.
As CUToday.info reported, NCUA sent the letter in response to an inquiry from the Wisconsin Credit Union League seeking clarity around 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 has said it’s also appropriate for federally insured state charters in Wisconsin, as well.
"We vehemently disagree with the interpretations expressed in NCUA's opinion letter concerning the purported impact of Wisconsin law on state-chartered credit unions and contend that the NCUA lacks the authority to issue this opinion,” said Rose Oswald Poels, president/CEO of the Wisconsin Bankers Association. “The NCUA claims their advertising rule preempts Wisconsin state law in two instances: the Wisconsin Deceptive Trade Practices Act and a banking law governing the use of the word ‘bank.’ The opinion's hyperbolic language tests credulity. NCUA goes so far as to claim the inability to use misleading terminology in advertising would ‘jeopardize’ credit unions' safety and soundness.”
In a statement, Oswald Poels said any argument by NCUA that preemption of Wisconsin law is necessary to create a "level playing field" is “disingenuous,” saying the agency’s attempt to “create equality among competitors with this interpretation (entirely ignores) the unfair tax and regulatory advantages credit unions enjoy.”
“We hope and expect that NCUA and all stakeholders involved will consider the best interests of consumers while seeking a resolution to what we interpret as a significant overreach of the NCUA's power,” concluded Oswald Poels.