The state Senate and House of Delegates were unable to agree last night on a bill to phase out the Credit Union Insurance Corp., the last provider of private deposit insurance in Maryland.
CUIC, which insures the deposits of 11 credit unions, faced the most serious challenge to its existence this year with bills approved by both houses that would have phased out the insurer in four years.
But a disagreement between the House and the Senate over what should happen to the $2.9 million in CUIC's coffers doomed the effort this year.
The Senate bill called on CUIC and the Maryland bank commissioner to make recommendations to the General Assembly in two years on how the money that CUIC has -- deposits and net earnings -- should be distributed.
But instead of going along with this proposal, the House bill would have allowed the money to go to a non-profit group for the benefit of the credit union movement. Backers of the Senate bill did not agree.
The Senate asked the House to forgo its position but the House refused.
Despite a last-minute conference between the two sides last night, the differences could not be resolved.
CUIC president Maureen W. Schwartz said she was pleased that the measure failed. But she was perplexed with the failure of the House version, which was essentially a compromise proposed by CUIC. "Im just flabbergasted," she said.
"They (backers of the Senate bill) must want to steal the money."
CUIC has been relatively obscure for the past few years. But it become more visible after the Rhode Island banking crisis earlier this year when Gov. Bruce G. Sundlun closed 45 banks and credit unions in that state because the coffers of the private insurer that covered the deposits had been drastically depleted due to a previous bank failure.
The Rhode Island crisis sparked new concerns among Maryland legislators about CUIC, whose supporters countered that the fund is sound and that there is no need to eliminate it.
The 16-year-old CUIC now insures about $60 million in deposits ranging from the Post Office Credit Union of Maryland, with $20.3 million in deposits, to smaller operations with less than $100,000 in deposits.
Deposits at credit unions that are members of CUIC are insured up to $100,000 per account.