The long-running industry debate over federal versus private insurance for credit unions was fired up again this week thanks to the financial mishaps at Silver State Credit Union in Nevada with both NCUA and American Share Insurance parties trading barbs about "scare" tactics.
The latest pronouncements came amid two developments: ASI's decision to impose an unprecedented 15 basis point premium to take care of expected losses from unidentified problem CUs and comments made to a Las Vegas newspaper Tuesday by the Silver State CEO, David Rhamy that NCUA Chairman Debbie Matz was unduly engaging in "scare" maneuvers to get rid of private insurance.
Specifically, Rhamy charged that Matz in remarks at a CUES conference earlier this month was trying to scare people that ASI-insured CUs were at risk and that the Ohio-based ASI lacks ability to pay depositors if a large CU fails, a claim vigorously denied by ASI.
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Asked by Credit Union Times for a response to Rhamy's comments, John J. McKechnie, NCUA director of public and congressional affairs, said, "NCUA has one goal in mind: protecting consumer deposits in credit unions. There is no substitute for the strength and stability of NCUSIF insurance, which carries with it the backing of the full faith and credit of the federal government."
"Chairman Matz believes that consumers need to be well-informed about deposit insurance, particularly in times like these," said McKechnie, adding that "includes among other things, understanding what guarantees stand behind the insurance, how strong the respective insurance funds are, and how payouts would occur in the case of the closure of an institution."
CEOs of other ASI-insured CUs in Nevada, while not specifically endorsing Rhamy's remark, said they strongly supported the ASI premium to take care of failed and problem CUs, claiming also that Matz was speaking out "because of the pressure on the NCUA system."
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