New IOLTA Law Removes Constraints, Creates Parity with Banks
ALEXANDRIA, Va. (Dec. 19, 2014) – With President Barack Obama’s signing of the Credit Union Share Insurance Fund Parity Act, lawyers’ trust accounts at federally insured credit unions are now insured to the limit allowed by the Share Insurance Fund, National Credit Union Board Chairman Debbie Matz said today.
“Credit unions now have parity with banks and, effective immediately, can fully insure lawyers’ trust accounts up to $250,000 for each owner of the funds, which they could not do before,” Matz said. “An attorney who is a member of the credit union where the trust account is opened now has a choice of financial institutions for that trust account. This enhances public confidence in both the banking and the credit union systems now that federal share and deposit insurance programs administered by NCUA and the FDIC are the same.
“I would like to thank President Obama for signing this into law and Rep. Ed Royce (R-Calif.) and Rep. Ed Perlmutter (D-Colo.) for their leadership,” Matz said. “Sen. Angus King (I-Maine) and Sen. Mark Warner (D-Va.) played important roles moving this through the Senate. I am also pleased Congress adopted NCUA’s recommendations regarding this legislation.”
Previously, credit unions could not offer the same level of insurance for these accounts as banks; because not all clients of a lawyer were members of the credit union that held the trust account. This placed credit unions at a competitive disadvantage because it was impractical to require attorneys to establish multi-client lawyers’ trust accounts in different credit unions to ensure full Share Insurance coverage.
Matz said NCUA will make changes to its regulations to fully conform to the Act, but that accounts are fully insurable under the new law.
NCUA is the independent federal agency created by the U.S. Congress to regulate, charter and supervise federal credit unions. With the backing of the full faith and credit of the United States, NCUA operates and manages the National Credit Union Share
Insurance Fund, insuring the deposits of account holders in all federal credit unions and the overwhelming majority of
state-chartered credit unions. At MyCreditUnion.gov, NCUA also educates the public on consumer protection and financial literacy issues.