CU IOLTA Legislation Signed Into Law
As
reported by CUNA’s News Now a few minutes ago, this afternoon President Obama
signed the Credit Union Share Insurance Fund Parity Act into law. The bill
creates deposit insurance parity for credit unions by directing the National
Credit Union Administration to extend share insurance coverage to trust
accounts, such as Interest on Lawyer Trust Accounts (IOLTA) and other similar
accounts, opened and managed by credit union members.
An interpretation of the previous law by NCUA resulted in the IOLTAs in credit unions being excluded from coverage by the NCUSIF. As we previously reported, a few years ago the Vermont Bar Foundation had brief considerations of disallowing placement of bar member trust accounts in Vermont credit unions due to the lack of official deposit insurance coverage. Following AVCU’s advocacy efforts with the Bar Foundation at the time, an understanding of the long history of safety and soundness of Vermont credit unions prevailed and Vermont credit unions continued as a permissible investment for funds held in trust by Vermont lawyers. Meanwhile, AVCU conveyed the need for a permanent legislative fix to the Vermont congressional delegation on numerous occasions while CUNA sought corrective legislation with Congress.
An interpretation of the previous law by NCUA resulted in the IOLTAs in credit unions being excluded from coverage by the NCUSIF. As we previously reported, a few years ago the Vermont Bar Foundation had brief considerations of disallowing placement of bar member trust accounts in Vermont credit unions due to the lack of official deposit insurance coverage. Following AVCU’s advocacy efforts with the Bar Foundation at the time, an understanding of the long history of safety and soundness of Vermont credit unions prevailed and Vermont credit unions continued as a permissible investment for funds held in trust by Vermont lawyers. Meanwhile, AVCU conveyed the need for a permanent legislative fix to the Vermont congressional delegation on numerous occasions while CUNA sought corrective legislation with Congress.
The
credit union IOLTA insuring legislation signed by the President today was
introduced by Senators Angus King (I-Maine) and Mark Warner (D-Va.) and
Representatives Ed Royce (R-Calif.) and Ed Perlmutter (D-Colo.).
The
Senate passed the bill by unanimous consent last week and the House voted
passage in May. The new law creates parity on IOLTA account insured
status to not-for-profit cooperative credit unions.
Your
Association will be conveying this news to the Vermont Bar Foundation.
Seven Vermont credit unions are currently authorized by the Bar
Foundation for IOLTA use by Vermont lawyers. To learn more about IOLTAs in
Vermont, how the interest is used, the list of participating institutions and
how to participate go to http://www.vtbarfoundation.org/iolta/
See
CUNA’s NewsNow report on today’s development here.
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