ARLINGTON, Va. — NAFCU submitted a comment letter today urging the Washington State Department of Financial Institutions not to use its statutory authority to allow state chartered credit unions to employ private primary deposit insurance.
"While we recognize that secondary share insurance (i.e., insuring shares above the ceiling provided under by federal insurance) provided by private entities is important, NAFCU believes that primary share insurance should only be provided by the Federal government," NAFCU President/CEO Fred Becker wrote.
Without federal backing, he added, "NAFCU believes that primary share insurance coverage provided by private entities is fundamentally flawed and cannot adequately protect American depositors."
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According to Becker, American Share Insurance, the sole surviving private primary deposit insurer for credit unions does not have the backing of the federal government and no reinsurance. "For this very reason, the General Accountability Office in 2003 doubted the ability of a private insurer's ability to "absorb catastrophic losses,"" he wrote.
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