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IOLTA Fix Passes House Committee
Friday, November 15, 2013 7:00 AM

The House Financial Services Committee has just approved legislation that would extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts. This is the first stand-alone credit union regulatory relief bill since March 28, 1998.

The bill, known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468), would provide National Credit Union Share Insurance Fund coverage for accounts such as Interest on Lawyers Trust Accounts (IOLTAs) so they are treated for deposit insurance purposes on the same basis as similar accounts insured by the Federal Deposit Insurance Corporation.

The bill would correct the NCUA's interpretation of the Federal Credit Union Act that puts credit unions at a disadvantage. The NCUA has said that for full insurance coverage, all the clients must be members, rather than just the attorney establishing the account.