WASHINGTON (2/29/16)--Suggestions that credit unions are not as regulated as banks could not be further from the truth, the Credit Union National Association (CUNA) told the Florida Bar Board of Governors in a letter. Some in Florida have suggested credit unions’ supposed lack of regulation makes them unable to handle the complexities of interest on lawyer trust accounts. (IOLTAs), which CUNA strongly disagrees with.
The Florida Bar Board of Governors proposed to amend its own rules to allow IOLTAs, and bankers have responded with inaccurate attacks questioning credit unions’ ability to handle IOLTAs.
“The Board of Governors can be assured, credit unions likewise are able to manage a deposit account subject to the Bar’s regulations,” CUNA wrote. “While we appreciate that the bankers would like to protect their market share, from a public policy standpoint, allowing credit unions to accept IOTA accounts is good for everyone. Lawyers should have the choice.”
Under an IOLTA program, an attorney or law firm may establish an account at a financial institution to hold clients' funds to pay for legal services or other purposes. In December 2014, President Barack Obama signed into law the Credit Union Insurance Fund Parity Act, allowing IOLTAs to receive pass through share insurance coverage.
The National Credit Union Administration followed by finalizing a rule altering its own regulations to fit the new law. The NCUA’s rule became effective January 27.
In its letter, CUNA also urged the board to reach out to the Florida Office of Financial Regulation, which serves as the state’s prudential banking and credit union regulator.
“They will be able to assure you that credit unions operate in a safe and sound manner and are suitable institutions for lawyers to place their trust accounts,” CUNA wrote.