SAN FRANCISCO-Patelco Credit Union caught the eyes of the credit union community in 2002 when it announced its plan to convert from federal deposit insurance to a private fund. Patelco's members overwhelmingly passed the measure to convert to the American Share Insurance fund with 40,734 votes in favor out of a total 66,755 or more than 61%. Only 20% of the credit union's membership or 38,241 total votes were required for the decision. Patelco's conversion was spurred by the credit union's $480 million in uninsured deposits, which was only growing with the current flight to safety. ASI provides primary deposit insurance coverage up to $250,000 per account and does not limit the number of accounts an individual can have insured. The National Credit Union Share Insurance Fund provides just $100,000 in coverage per account for a limited number of accounts per member. Additionally, "one size fits all" regulation from NCUA through the NCUSIF was also cited at Patelco's Web site. The conversion of the $2.9 billion credit union is the largest to date. While acknowledging the conversion as an individual credit union decision to convert, the switch was not particularly well received by the NCUA Board members. Patelco will represent 22% of ASI's entire fund, which is financially sound, but some questioned whether it can carry that kind of load if the going gets tough. ASI has said it is going to keep closer tabs on Patelco because of its size, even though the credit union would first have to go through nearly $300 million in capital before any problems would land in ASI's lap. At the time of the conversion NCUA Chairman Dennis Dollar would not comment on Patelco's conversion, and he has since remained fairly quiet on the subject. His executive assistant, Kirk Cuevas, did say that they are not concerned about this sparking a trend. However, Dollar's fellow board members have indicated their concerns about it. "I don't know that it could lead to a trend but I would hope not.I hope that credit unions would think long and hard before going down that path," NCUA Board Member Deborah Matz commented earlier this year. She questioned whether the membership understood the full implications of leaving the federal fund. She emphasized that, while ASI and Patelco are both strong institutions, if-improbable as it may seem-the two ran into trouble, Matz said she does not think the general public would distinguish between privately and federally insured institutions. At NAFCU's Congressional Caucus, NCUA Board Member JoAnn Johnson told attendees that the backing of the federal government in federal deposit insurance can not be overstated. What has peaked further attention surrounding the conversion is that Patelco's president and CEO is none other than former NCUA Chairman Ed Callahan, who continues to be a strong proponent of the NCUSIF. He is retiring at the end of this year. [email protected]