OLYMPIA, Wash. — American Bankers Association Senior Economist Keith Leggett has written the Washington State Department of Financial Institutions in opposition to its proposal to permit private primary deposit insurance for credit unions based on the public policy implications of a failure.
"From a public policy perspective, it is important for the DFI to consider the economic disruption that would arise should a private primary insurer's reserves prove inadequate and also whether taxpayers will be at risk," he wrote in a letter dated July 31.
"History demonstrates that private primary deposit insurers in the past have lacked the liquidity necessary to withstand a large concentration of financial institution failures." He cited a Government Accountability Office report and former Federal Reserve Board Chairman Alan Greenspan that pointed out the risks of private primary deposit insurance.
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