The House Financial Services Committee approved a bill Thursday morning that would extend share insurance coverage to all of the owners of funds held by lawyers in trust accounts.
The bill (H.R. 3468) — also known as the Credit Union Share Insurance Fund Parity Act — amends the Federal Credit Union Act to expand share insurance coverage to accounts held in the name of nonmembers.
NCUA issued an opinion letter in 2008 on insurance coverage on interest on lawyers' trust accounts, also known as IOLTAs. These are accounts opened by lawyers at credit unions or banks to hold funds for their clients. The interest accrued is usually paid to the state or the state bar association to fund legal services.
That puts credit unions at a disadvantage to attract this type of account, according to CUNA, if all the lawyers' clients must be credit union members, instead of just the lawyer opening the account.
"We hope that [the bill] is the first of many regulatory relief bills to move through this committee," said CUNA Senior Vice President of legislative affairs Ryan Donovan following the vote.
