Silver State ‘Scare’ Heats Up ASI Vs. NCUA Debate

CU Times - 12/30/2009

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 deposit 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 Deborah Matz was unduly engaging in “scare” maneuvers to get rid of private insurance.

Specifically, Rhamy charged that NCUA Chairwoman Deborah 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.   

Asked by Credit Union Times for a response to Rhamy’s “scare” 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.”