Written by Alicia Nealon, Director of Regulatory Affairs
With the passage of the NAFCU-supported Credit Union Share Insurance Parity Act, Congress directed NCUA to provide pass-through share insurance coverage to interest on lawyers' trust accounts (IOLTAs), and other similar escrow accounts. So now the answer to the burning question that so many credit unions have been asking: can credit unions start offering IOLTAs and other similar escrow accounts with share insurance coverage now?
“Other similar escrow accounts”- soon, but you need to weigh-in
The Credit Union Share Insurance Fund Parity Act mandates that NCUA provide share insurance coverage to interest on lawyers' trust accounts (IOLTAs), and other similar escrow accounts, on a pass through basis regardless of whether they are comprised of funds of members or nonmembers. The law, however, provides that pass-through insurance will only be extended “in accordance with regulations issued by [NCUA]”
In December 2014, NCUA Chairman Matz announced that federal credit unions may immediately begin offering IOLTAs with share insurance coverage. She also indicated that NCUA will make changes to Part 745 to fully conform with the Credit Union Share Insurance Fund Parity Act.
So what does this all mean? NCUA has spoken on IOLTAs and confirmed that federal credit unions can start offering IOLTAs today with share insurance coverage. NCUA, however, is waiting to address other parts of the law, such as “other similar escrow accounts,” in upcoming regulation.
As the agency contemplates its amendments to Part 745, it’s pivotal that the credit union industry provide feedback as we have a chance to frame the discussion of how NCUA will interpret the law’s “other similar escrow accounts” language.
Lucky for us, Part 745 is actively open for comment. As many of you may know, NCUA is conducting a review of all its regulations under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA). Because EGRPRA requires NCUA to categorize its regulations, the agency conducts the review as a series of comment periods for each category of regulations. Currently, NCUA is in the second phase of its EGRPRA review, and Part 745 is one of the regulations open for comment.
Earlier this week, NAFCU released its Regulatory Alert 15-EA-03 on NCUA’s second EGPRRA review, and specifically addressed how the passage of the Credit Union Share Insurance Fund Parity Act would require NCUA to amend Part 745. We are asking our members what types of escrow accounts that they believe warrant share insurance coverage, including any escrow accounts that they currently offer or any they may want to offer in the future.
My Friday wish is that you all consider these questions and either complete our Regulatory Survey, or reach out to me directly (firstname.lastname@example.org, 703-842-2266) with your thoughts. NAFCU has been extremely active on this issue, from leading the charge to pass the Credit Union Share Insurance Fund Parity Act, to encouraging NCUA to immediately act on it. We are going to keep our momentum going, but we need your feedback!
Compliance and Football: I am sure those in the compliance community will be watching the Super Bowl this Sunday between the New England Patriots and the Seattle Seahawks, along with almost everyone else in America. Those that have followed the news leading up to the game, will know that the Patriots have come under fire for the air pressure of some of the footballs that the team provided in the AFC Championship game. While there has been a lot of buzz in the media about what is being termed “deflate-gate,” a good compliance officer knows it is important to read what the rules say. In order to help you sound intelligent when this discussion arises at your party for the big game on Sunday, I thought I would share with you the link to the proper section of the NFL rulebook the covers “The Ball” so, like a good compliance officer, you can know what the rules actually say when others are pontificating about the issue. And since you’ll know the right rules, maybe you will get a high-five, unlike Tom Brady…..