Federal bank and credit union regulators stepped in yesterday to mend one of the last loopholes in the nation's banking safety net after the president of a privately insured Rhode Island bank disappeared and regulators found several million dollars missing from his bank.

A run that drained off $13.6 million of the $22 million in deposits of Heritage Loan and Investment Co. was triggered by reports that the bank's president, Joseph Mollicone Jr., had not been seen since Nov. 8 when he got on an airplane for a flight to New Jersey.

The same run led to a drain of half the assets of the private Rhode Island Share and Deposit Indemnity Fund.

In a rerun of the circumstances that lead to the collapse of Maryland's private savings and loan deposit insurance system in 1985, the Rhode Island incident is expected to put the insurance fund out of business. It protects depositors in 45 state-chartered institutions.

Yesterday, two dozen Rhode Island banks and credit unions made emergency applications for federal deposit insurance to replace their private insurance coverage.

The Federal Deposit Insurance Corp. and the National Credit Union Administration promised to expedite action to bring the Rhode Island institutions and their depositors under the federal umbrella as quickly as possible.

Well over 99 percent of all accounts in U.S. financial institutions are protected by federal deposit insurance, but there remain a handful of states that permit some banks, savings and loans and credit unions to operate without federal insurance.

Until yesterday, Rhode Island was one of those exceptions. Rhode Island banking officials said they expect all of the 45 financial institutions now covered by the Rhode Island Share and Deposit Indemnity Fund to seek federal deposit insurance.

The private fund covered depositors in 35 credit unions, two conventional banks and eight "loan and investment banks," a unique type of specialized bank that exists only in Rhode Island.

The fund had only $25 million in cash reserves to protect depositors with $1.6 billion in their accounts.

Half that money has been paid out in the last week to Heritage depositors.

State regulators shut down Heritage's two branches on Sunday and turned its operations over to Fred J. Franklin, director of the state Department of Business Regulation.

There is "certainly a significant amount of money missing from the bank," Franklin told the Associated Press.

Peter Nevola, president of the private insurance fund, said examiners have found several loans taken out in the names of customers who say they never borrowed any money from Heritage. The loan and investment banks specialize in consumer loans, mostly second mortgages, he explained.

Nevola said there had not been any runs on any of the other institutions insured by the Rhode Island fund. But he said he expects all of its members will seek federal deposit insurance and the fund will fold once the institutions qualify for federal coverage.

Robert Loftus, director of public affairs for the National Credit Union Administration, said government officials are "trying to do our best to expedite the process. By the end of next week we could make a decision on some of them."

The FDIC will begin examining the privately insured Rhode Island banks by next week and "will bring the ones that qualify into the fold," said spokesman Carol Austrian.

Loftus said most large credit unions are federally chartered and are required to have federal insurance. Most states also require their state-regulated credit unions to have federal insurance, leaving only about 3 percent of the $180 billion in credit union accounts outside NCUA insurance.

Maryland is one of eight remaining states that permit some credit unions to operate without federal insurance and is considering legislation to make them get federal coverage.