The word of the day is “bank” (verb)

Recently, we blogged about the topic of federal preemption and a recent Ninth Circuit appellate case raising questions about state laws that require payment of interest on mortgage escrow accounts.  That blog post also mentioned a new NCUA legal opinion on preemption.  Today, we’ll talk more about it.

Verb, yes. Noun, no.

NCUA has issued a legal opinion on preemption of a Wisconsin law restricting credit unions from using the word “bank” in advertising.  The opinion concludes that two Wisconsin state statutes are preempted by federal law with respect to a federally insured credit union’s use of the word “bank” as a verb to refer to the credit union’s provision of financial services to its members.  However, the opinion also notes that a federally insured credit union in Wisconsin is not permitted to use the word as a noun to refer to itself as a “bank” or “banking organization.”

Wisconsin Laws

The NCUA opinion addresses two Wisconsin statutes.  The first is a provision of the Wisconsin Banking Law that prohibits any person who is not subject to supervision and examination by the Wisconsin Division of Banking from referring to itself as a “bank” or otherwise indicating it is engaged in the business of banking. See, Wis. Stats. § 221.0402(1).  The second is a provision of the Wisconsin Deceptive Trade Practices Act (DTPA) that prohibits any person, firm, corporation, or association, or any agent or employee of the same from making untrue, deceptive, or misleading advertisements. See, Wis. Stats. § 100.18(1).

 

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