They always say that it is futile to engage in a war of words with the fellow who owns the ink; nevertheless, I would like to respond to Mike Welch’s column of March 12. Mike questions the timing and legitimacy of NAFCU taking a position advocating federal share insurance as the primary insurance for all credit unions; at the same time, he fails to address important public policy questions. Let me respond to these points. * Timing. NAFCU did not initiate the discussion on the pros and cons of private insurance. It actually started in April of last year when Fed Chairman Alan Greenspan, in testimony before the Senate Banking Committee, set forth his thoughts as to “why there is no private insurer substitute for deposit insurance from the government.” Additional attention was focused on the issue last spring when, during a subcommittee hearing on Regulatory Relief, Rep. Paul Kanjorski (D-Pa.) expressed “safety and soundness” concerns about a provision that would allow privately insured credit unions to gain access to the Federal Home Loan Bank System. Then a month ago, Congress itself weighed in when it passed its 2003 appropriations bill and conferees noted their concern that “the consumer protection intent [of section 151 of the FDIC Improvement Act] may be going largely unenforced.” The conferees directed the GAO to “evaluate the risk to consumers” who may not realize privately insured deposits are not backed by the U.S. government. So public debate on private insurance had occurred long before the NAFCU Board exercised its responsibility and prerogative to weigh in on an issue of concern to policymakers in Washington. * Legitimacy. NAFCU was created in 1967 to represent the interests of federal credit unions in Washington. That remains NAFCU’s focus today. Over the years there have been cases where NAFCU has stood up for the interests of all credit unions, and I believe NAFCU’s actions have consistently proven to be both appropriate and proper. Whether as the sole voice in successfully resisting the efforts of Treasury to have credit unions write down their 1% NCUSIF deposits, or its recent leadership in challenging California’s authority to impose burdensome credit card disclosures, NAFCU has been in the forefront of advocating sound policy for federal credit unions and the credit union community as a whole. I would also observe that in virtually every instance when a private insurance fund failed or felt threatened, the state authorities and the privately insured credit unions themselves turned only to one place: the National Credit Union Share Insurance Fund. Against that backdrop, NAFCU has every right to legitimately join in the public policy discussion others have initiated * Public policy. The inescapable conclusion the NAFCU Board reached after much discussion was that the private insurance option enjoyed by state-chartered credit unions in just nine states and Puerto Rico is not worth the risk it imposes on our community and on America’s 83 million credit union members. Whether it’s safety and soundness concerns, a consumer’s right to know whether their shares are backed by the government, or the dismal history of private insurance in general, these are the public policy issues that need to be aired in a debate on this subject – not posturing over whether such views are “divisive” or “ill-timed.” Finally, I want to make clear that NAFCU’s policy is in no way intended to call into question the strength or management expertise of any private insurer or privately insured credit union. Our policy supporting federal share insurance for all credit unions is akin to our support for the continued tax-exempt status of credit unions. Both were adopted with nothing but the best interests of all credit unions in mind. Fred Becker President and CEO NAFCU Arlington, Va.

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