Education

University of Iowa Community Credit Union pushes back against regents' trademark proposal

Board member Larry McKibben is part owner of Farmers Savings Bank

University of Iowa Community Credit Union at 716 A Ave NE in Cedar Rapids on Friday, Mar. 2, 2018. (Stephen Mally/The Gazette)
University of Iowa Community Credit Union at 716 A Ave NE in Cedar Rapids on Friday, Mar. 2, 2018. (Stephen Mally/The Gazette)
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IOWA CITY — The very public battle between credit unions and banks has extended beyond the Iowa Capitol to now envelop the state Board of Regents.

The University of Iowa Community Credit Union president is questioning the motives of a regent who is advocating a policy that would prohibit use of protected university marks in names of unaffiliated entities — like the credit union.

Regent Larry McKibben recently brought up concerns he had about the UI’s reputation being besmirched should the credit union face scandal. He cited the example of Wells Fargo, which was rocked by the disclosure its employees created millions of unauthorized accounts to meet quotas.

“I am working on a Board of Regents policy that will be over all three universities to handle things like this, because of my concern about what could happen,” McKibben said at a February board meeting.

But McKibben did not also mention that he is part owner of a bank.

The two types of financial institutions have long argued over market share and fairness. Banks have asserted that credit unions have morphed beyond their original purpose to gobble up more and more customers without facing the same regulations and taxes. Credit unions, on the other hand, say they are owned by their members and are nonprofit, and so should be treated differently than banks.

The regents office this week unveiled a new policy proposal that McKibben said aims for consistency across the University of Iowa, Iowa State University and the University of Northern Iowa. Regents are scheduled to consider a first of two readings next week.

Each university already has trademark management and licensing policies. But McKibben — in his capacity on the board’s audit and compliance committee — pointed to credit unions’ use of the UI and UNI names, and said he wants to do more to protect the institutions.

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“It’s something our committee and Regent Dunkel and I have talked about,” he said, referring to regent Nancy Dunkel, who chairs the audit and compliance committee.

The board hasn’t made clear whether the proposed policy could affect the credit unions’ existing use of the UI and UNI names, which have been in place for decades.

But UI Community Credit Union President Jeff Disterhoft said he thinks McKibben has a conflict in raising a credit union policy.

“I find it interesting that a group such as the Board of Regents, which I would think would have relatively high expectations for objectivity, in this particular case does indeed have at least one conflict of interest that could in part be driving some of their thought process,” he said.

McKibben says there’s no conflict

McKibben is part owner Farmers Savings Bank in Marshalltown, according to public records kept by the Federal Deposit Insurance Corp. and the Secretary of State.

“That would be a competitor of ours,” Disterhoft said.

Dunkel serves on the board of Principal Bank in Des Moines and — in her long banking career — held many other leadership roles in the banking industry.

In conflict of interest disclosure forms required of regents, Dunkel lists her service on the Principal board. McKibben reports no conflicts. He said this week that’s because he doesn’t believe he has any.

“Do what I belong to or what I’m part of — does any of that have an effect on what I’m doing as regent?” McKibben asked. “Good Lord, no.”

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McKibben said he believes Disterhoft’s accusations are from stresses as the Capitol, where lawmakers are considering changing state law to treat banks and credit unions under the same tax structure.

Currently, Iowa banks pay a 5 percent franchise tax, while credit unions pay a tax worth .5 percent of their reserves. A proposed bill, which passed the Iowa Senate, would require both banks and credit unions pay a franchise tax of 2 percent on the first $7.5 million of annual profits and 4 percent on profits beyond that.

‘I think it’s controversial’

The UI Community Credit Union is the largest financial institute in the state, but Disterhoft said he is not sure if having the UI as part of its name is a pro or a con. Some customers might use the credit union because of their affinity for the university, he conceded. But others might not over confusion whether you have to be associated with the UI to become a member.

Disterhoft said the credit union has a long history with the name, which he points out is actually different from the UI’s official name as State University of Iowa.

The credit union’s genesis dates to 1938. It was organized by UI employees under the name “State University of Iowa Employees Credit Union.” The entity in 1966 changed its name to University of Iowa Community Credit Union, and over time expanded its customer reach beyond UI employees.

Today, it offers 16 branches and boasts 170,700 members. Its total assets were nearly $4.7 billion at the close of 2017, according to an annual report.

In 2014, Rep. Chip Baltimore, R-Boone, asked the Iowa Attorney General’s Office to investigate whether the credit union’s use of the UI name violates state law. The office in 2015 declined to offer an opinion but noted the name is rooted in its historical founding and the credit union isn’t using any trademarked images.

McKibben during the February meeting said confusion remains.

UI Senior Vice President for Finance and Operations Rod Lehnertz told McKibben he’s not alone in hearing the concern and other regents said they, too, were worried about any fallout.

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“I think it’s a problem,” Regent Patty Cownie said. “I think it’s controversial. I know it’s controversial.”

Despite the stated concerns, Disterhoft said the credit union has received no communication “in any way shape or form by the Board of Regents on this issue.”

l Comments: (319) 339-3158; vanessa.miller@thegazette.com

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