ALEXANDRIA, Va. (12/23/14)--The federal credit union regulator has met President Barack Obama's signature of the Credit Union Share Insurance Fund Parity Act with encouragement, declaring that lawyers' trust accounts at federally insured credit unions are now insured to the limit by the Share Insurance Fund.
NCUA Chair Debbie Matz said the agency will make changes to its regulations to fully conform with the act.
"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 [Federal Deposit Insurance Corp.] are the same."
Previously, interest on lawyer trust accounts (IOLTAs) could only be held at a credit union if each person involved with the account was a member of the credit union. According to the NCUA, 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.
The bill allows IOLTAs and similar accounts to be held at a credit union if either the administering attorney or the escrow agent is a member.
The passage of the bill has been lauded by credit unions, particularly as an avenue to welcome law firms and other businesses who traditionally could not establish a business relationship due to a credit union not being able to offer IOLTAs.
"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."
The Credit Union National Association was a longtime advocate for the bill, writing several letters urging 113th Congress to pass the bill before it adjourned and addressing the matter in a meeting with White House economic policy staff.