Congress Acts to Require FDIC Protection of IOLTA
Congress has passed a bill requiring the Federal Deposit Insurance Corporation to provide full insurance coverage to Interest on Lawyers’ Trust Accounts (IOLTA), a major source of funding for legal aid programs nationwide.
The bill (H.R. 6398) extends the existing FDIC protection—set to expire Dec. 31—for an additional two years.
The Senate passed the bill Dec. 22 thanks to Sen. Jeff Merkley and a bipartisan group of supporters: Bob Corker (R-Tenn.), John Cornyn (R-Texas), Christopher Dodd (D-Conn.), Michael Enzi (R-Wyo.), Johnny Isakson (R-Ga.) and Tim Johnson (D-S.D.).
The House of Representatives approved the measure Nov. 30. Rep. Lloyd Doggett (D-Texas) sponsored the bill and spoke on the House floor about the importance of IOLTA.
“I saw firsthand the benefits of these programs in ensuring access to justice for those who otherwise might be unable to secure justice,” said Rep. Doggett, a former justice of the Supreme Court of Texas. “Some of those who need legal assistance the most—veterans who have served honorably, domestic violence victims, and persons with disabilities—are too often the least able to obtain it.”
Rep. Judy Biggert (R-Ill.) spoke in support of the bill and summed up the danger of allowing the FDIC coverage to expire.
“If the current guarantee were allowed to lapse,” she said, “attorneys in the 37 States with IOLTA mandates, acting in accordance with their fiduciary duties to maintain the security of the client funds, might be forced to transfer IOLTA accounts from local community banks to larger, safer institutions, and attorneys in the other jurisdictions might be forced to transfer funds from IOLTA accounts to non-interest-bearing accounts to qualify for unlimited FDIC coverage. If the coverage for these accounts is not extended, a critical source of civil legal aid might unnecessarily and inappropriately shrink.”
The efforts of the American Bar Association were instrumental to the passage of this bill.
From LSC Updates, December 22, 2010