WASHINGTON (1/29/15)--The passage of the Credit Union Share Insurance Fund Parity Act has raised a number of questions from credit unions about its potential applications, questions summarized by the Credit Union National Association in a letter to the National Credit Union Administration Wednesday.
The bill was signed into law in December, which was followed by NCUA Chair Debbie Matz announcing interest on lawyer trust accounts (IOLTAs) were now covered by the National Credit Union Share Insurance Fund (NCUSIF). Matz has also indicated that the agency is working to update Part 745 of the NCUA's regulations, which pertain to insurance.
While the law allows IOLTAs to be covered by the NCUSIF, it also provides coverage for "other similar escrow accounts," according to the bill's text. Credit unions have inquired as to whether this includes accounts such as prepaid funeral accounts and realtor escrow accounts.
"We do not think there is any question that the new provisions of the law cover these types of accounts, and we hope that Part 745 will enumerate types of accounts covered," reads the letter, signed by Lance Noggle, CUNA senior director of advocacy and counsel. "These accounts have very similar structures to IOLTAs and should receive similar insurance coverage."
Credit unions have also asked if the NCUA will use its authority to resolve questions about pass-through insurance of prepaid card programs. CUNA urged the agency to allow member businesses to offer payroll cards to employees, regardless of whether individual employees are members of the credit unions.
The Federal Deposit Insurance Corp. has determined that such accounts receive the same insurance coverage as other deposit accounts, and CUNA has urged the NCUA to follow suit.
CUNA also asked the NCUA to address questions on: