The "Battle Over the B-Word" was heating up Tuesday with the top credit union regulator in Vermont, bankers and the $600 million Vermont State Employees Credit Union.
Steve Kimbell, who has proposed a cease-and-desist order against VSECU that would ban it from using "bank" or "banking" in its ads – was accused by a blogging professor of bias and going after the credit union tax exemption, accusations he denied.
- UPDATE, Oct. 8, 2012, Vermont Credit Union, Regulator Settle 'B' Word Dispute
Meanwhile, the CBS-TV affiliate in Burlington – WCAX – said it will air a debate Tuesday during its 6 p.m. EDT news hour – pitting Steven Post, president/CEO of Montpelier-based VSECU, and Chris D'Elia, president/CEO of the Vermont Bankers Association.
Kimbell, who said he is already the target of harsh rhetoric from angry Vermont credit union leaders, said constitutional free speech is very much in play as it was in the U.S. Supreme Court ruling on Citizens United dealing with corporate political PACs in the presidential election.
"Credit unions have some very persuasive arguments on their side as to constitutional free speech including Citizens United," said Kimbell, the state's commissioner of the Department of Financial Regulation which June 18 issued its cease-and-desist notice of intent against VSECU.
Kimbell, a Montpelier attorney and former lobbyist, said he chose an administrative procedure in this case based on a strict interpretation of Vermont law dealing with use of "bank" language by financial institutions other than banks.
"This is a procedural action but it is not my job to make law since that is left to the Vermont legislature," said Kimbell who said his agency has assigned a hearing officer and expects to hold a hearing on VSECU's potential cease and desist in late August.
"We delayed a hearing until then to accommodate some of the summer vacation schedules of lawyers" who will be party to the state hearing, he said.
As for the TV debate, D'Elia of the Vermont Bankers reaffirmed in media comments Tuesday the VBA's long-standing argument that banks are obligated to pay federal taxes as well as a state franchise tax while credit unions which act like banks escape them.
In a direct response to that argument, as contained in a TV preview of the debate, Post is quoted as saying his credit union "is a nonprofit, a cooperative and is in the banking business and we want to be able to say we're a banking cooperative and come to your banking with us."
D'Elia also countered that credit unions because of their tax exemption are evading complying with Community Reinvestment Act regulations, an issue CUNA and state leagues frequently challenge as off the mark.
Separately, the credit union view won new online support in an op-ed blog written by a University of Vermont associate professor of law, Donald Kreis, complaining that Kimbell and DFR erred in bringing a cease-and-desist order based on the commissioner's bias.
Kreis charged that Kimbell in previous public statements is offering "a subjective opinion that the legislature lets credit unions get away with not paying a tax he believes they ought to pay."
In comments to Credit Union Times, Kimbell has denied favoritism but believes he has an obligation to carry the case forward "based on longstanding discussions we've had with the management and the board of Vermont State Employees."
On the online blog, Kreis argued that "it's not up to the commissioner of Financial Regulation to determine whether the Legislature did the right thing by exempting credit unions from a tax to which investor-owned financial institutions are subject."
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