ALEXANDRIA, Va.-In response to an August 19 article in The CEO Report, NCUA General Counsel Bob Fenner wrote a letter clarifying the agency's role in insurance conversions. He also took the opportunity to distinguish between federal and private deposit insurance. The article pertained to private deposit insurance offered by American Share Insurance (ASI) and described the process for converting from federal government-backed to private insurance. Fenner pointed out that a sidebar outlining the steps for conversion does not state that all conversions to private insurance must be approved by NCUA. "The Federal Credit Union Act and NCUA regulations provide that no credit union may convert from federal insurance to private insurance without the prior, written approval of the NCUA," Fenner wrote. The lawyer pointed out that the key difference between federal and private deposit insurance "is that the full faith and credit of the United States government backs shares that are insured by the National Credit Union Share Insurance Fund, just as it backs accounts insured by Federal Deposit Insurance Corporation." Fenner also pointed out that the article noted that ASI is one of just two private insurers from a group of 22, but does not mention what happened to the other 20 that disappeared in the late `80s and early `90s. He explained in an interview that many chose as a business decision to shut their doors after the passage of the Federal Deposit Insurance Corporation Improvement Act of 1991 was enacted. The new law required credit unions without federal insurance to disclose that fact to members in numerous ways and required members to sign an acknowledgement prior to depositing any shares that the government does not guarantee the member will get their deposits back. Fenner pointed to the failure of the Rhode Island system as the largest failure, which led to a substantial delay in repayment to customers and a loss of interest income for its patrons. He also noted the insolvency of the Tennessee system, which had credit union customers in Kansas that were ineligible for deposit coverage from the National Credit Union Share Insurance Fund and therefore caused a delay in getting funds back to customers. "Not one penny of insured savings has ever been lost by a member of a federally insured credit union," Fenner pointed out. He added, "Shares insured by ASI have no government guarantee." [email protected]