A time bomb exploded in Rhode Island last week. History and common sense suggest that a few more could explode in other states where deposits in financial institutions are insured by privately run insurance funds.

The experience in Rhode Island is the third warning in five years that private deposit-insurance programs are vulnerable to the vagaries of a rapidly changing financial services industry. Privately run deposit-insurance programs may be anachronisms.

Gov. Bruce Sundlun of Rhode Island had barely taken office last week when he learned that the state had a deposit-insurance crisis on its hands, much like those in Maryland and Ohio six years ago.

The Rhode Island Share and Deposit Indemnity Corp. (RISDIC), a privately operated fund, collapsed after depositors began a run on the state's second largest credit union. And just as governors in Ohio and Maryland were forced to do in 1985, Sundlun closed the state's privately insured institutions (12 banks and 33 credit unions), freezing depositors' funds.

As reported by The Washington Post, Sundlun subsequently assured depositors that the state would protect their accounts -- up to $100,000 each -- against losses. State officials must now come up with a plan and the money to bail out depositors if necessary in cases where institutions fail to obtain federal insurance as ordered.

Not surprisingly, officials at privately insured credit unions in other states are dismissing the notion that a similar crisis could erupt within their borders. Where have we heard that naive reaction before?

When problems at a state-chartered S&L triggered the collapse of a private insurance fund in Ohio six years ago, a chagrined Richard F. Celeste, then governor of the state, admitted he didn't know the fund existed.

In his candor, however, the governor seemed to be stating the prevailing sentiment in the state at the time. Until then, few people were familiar with these rather obscure funds that cover only a small percentage of total deposits in financial institutions.

Ohio's experience attracted national attention, nevertheless, clearly indicating that private deposit-insurance funds in other states were vulnerable to the collapse of one or more member institutions. Or so it seemed at the time.

Still, officials in states that sanctioned privately operated deposit-insurance funds dismissed the collapse in Ohio as an isolated incident. Within a matter of months, Marylanders would pay a heavy price for the naivete' of officials who refused to believe the same thing could happen in their state.

Within hours of reports that the former Old Court Savings and Loan -- Maryland's largest privately insured thrift at the time -- was experiencing management and financial problems, the state's private insurance fund collapsed, just as suddenly as the system in Ohio.

It took four years for officials in Maryland to sort out the pieces that had contributed to the collapse and make good on their promise to return depositors' funds. Maryland took over the failed private insurance system and froze deposits at 102 state-chartered S&Ls, forcing their owners to obtain federal insurance or close.

Six S&Ls were placed in receivership, the industry lost nearly $200 million, and it took $300 million in state funds -- not counting legal expenses for the prosecution of theft and fraud cases -- to bring an end to the crisis.

Many of the depositors in S&Ls that were placed in receivership were forced to wait four years before all of their money was returned by the state.

If the scare in Ohio didn't prompt responsible people to question the viability of private insurance funds then certainly the Maryland S&L crisis should have.

In the wake of numerous failures at federally insured S&Ls a year ago, a Maryland official who played a key role in resolving that state's thrift crisis wryly observed that federal officials had apparently learned little from the problem in his state. "They didn't go to school on us," the official remarked.

They obviously didn't in Rhode Island and now it appears that there's a reluctance to doso in other states where private insurance funds exist.

Pennsylvania permits some banks and thrifts to be insured by a private fund and at least 20 states -- including Maryland -- have privately insured credit unions.

To some, private deposit insurance funds are considered just as safe as the National Credit Union Administration or the FederalDeposit Insurance Corp. fund, which is under increasing pressure to withstand failures and the threat of failure at a number of banks and S&Ls.

Deposits in federally insured institutions are backed nevertheless by the full faith and credit of the United States.

The government at least has the wherewithal to pay off depositors immediately if a federally insured institution fails. In the alternative it may merge a failed bank or thrift with a healthy institution.

Private insurers, however, can never be lenders of last resort.

These hybrid insurance funds are at best poor substitutes for federal deposit insurance and should be banned.

History has shown that they simply cannot withstand the failure of a relatively large member institution or even a run by depositors.

That's been a difficult lesson for some state officials and the lesson becomes clear only after they are forced to deal with a crisis at taxpayers' expense.

To prevent another deposit-insurance debacle such as those that have occurred in Ohio, Maryland and Rhode Island, Congress may need to mandate that deposits in U.S. currency be insured only by an agency of the federal government.