Md. Senate passes bill to abolish private insurer of state-chartered credit unions

March 16, 1991|By David Conn | David Conn,Annapolis Bureau of The Sun M. Dion Thompson of The Sun's Annapolis Bureau contributed to this report.

ANNAPOLIS -- The Senate yesterday passed a bill that would require Maryland's 12 remaining state-chartered credit unions to obtain federal insurance within four years and would terminate the private company that now insures them.

By a 31-16 vote, the legislators agreed that although the company, the Credit Union Insurance Corp., is as healthy as its small member institutions, whatever risk Maryland assumes in allowing the company to continue is too great.

Like the private company that insured Maryland's thrifts before 1985, CUIC originally was created by state law. Its members hold deposits of about $60 million.

"There is absolutely no problem with CUIC today. They are sound," said Sen. Thomas P. O'Reilly, D-Prince George's, and the bill's sponsor. But he added that in light of the state's 1985 thrift crisis, Maryland should not risk a future problem.

"Maryland taxpayers are potentially still on the hook," said Mr. O'Reilly, chairman of the Senate Finance Committee, which passed the bill last week.

Sen. George W. Della Jr., D-Baltimore and a Finance Committee member, argued that "nothing's wrong with CUIC. Not a darn thing. If you want to start a run on CUIC, go ahead and vote for this bill," he said.

The committee a week earlier had killed the bill, but decided to reconsider after one member, Sen. Larry Young, D-Baltimore, agreed to switch his vote.

Mr. Young said he changed his mind when an amendment was offered to delay the termination date of CUIC for four years.

But Sen. Patricia Sher, D-Montgomery, told The Sun that Mr. Young said he agreed to switch because of a deal he and Mr. O'Reilly worked out. "I have some other things I want," Ms. Sher said Mr. Young told her.

Both Mr. Young and Mr. O'Reilly denied that any deal involving other bills was offered or accepted. "Absolutely not, positively not," Mr. O'Reilly said. "Whoever said that is an absolute liar."

The bill as originally drafted also would have diverted the $2.9 million in CUIC's reserve fund into state coffers, specifically for the Department of Licensing and Regulation, but an amendment delayed for two years a decision about where the money will go.

The department's secretary, William A. Fogle Jr., was accused four years ago of trying to end CUIC to help a credit union with which he formerly was affiliated. The effort to kill CUIC in 1987 died when word of Mr. Fogle's alleged involvement turned up in the newspapers.

Mr. Fogle said he has done nothing to promote the current bill.

But Ms. Sher noted that Mr. Fogle sent his bank commissioner, Margie Muller, to the General Assembly to testify in favor of killing CUIC, even though she had never taken a position on the issue before. Ms. Muller explained her appearance to the Finance Committee by saying that "she was told to support it this year," Ms. Sher said.

"I find it appalling that you can politicize a regulator," Ms. Sher said. She said that Mr. Fogle and others, recalling their troubles in 1987, have not given up the fight over CUIC.

"To me this is nothing but their revenge on CUIC," she said.

Mr. Fogle called that charge "ridiculous."

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