Private Deposit Insurance On The ComebackTrail

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OLYMPIA, Wash. - (07/27/06) – Washington has become thesecond state this year to begin deliberations on the reintroductionof private deposit insurance for state chartered credit unions. TheDepartment of Financial Institutions said it has begin the processof defining the terms and identifying requirements of privateinsurance, more than a decade after the state’s privateinsurer, known as Washington CU Share Guarantee Association, wounddown its business and liquidated. The Washington fund was one ofmore than a dozen credit union funds around the country that closeddown after the debacle following the 1991 failure of Rhode IslandShare and Deposit Indemnity Corp. and more than 30 of its privatelyinsured credit unions, prompting a statewide bank holiday in RhodeIsland. But interest in the private deposit insurance option hasbeen rekindled in recent years, and just last month Texas, whichalso had its own private insurance fund until the RISDCI crisis,approved Ohio-based ASI to insure its state chartered creditunions. Washington’s DFI said several credit unions and theWashington CU League have inquired about reviving the privateinsurance option. The DFI is inviting interested parties to contactto participate in the rulemaking process.

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