Written by Bernadette Clair, Senior Regulatory Compliance Counsel
I hope everyone had a wonderful weekend – and here’s a little good cheer for Monday morning!
Last week, President Obama signed H.R. 3468, the “Credit Union Share Insurance Parity Act,” into law, ensuring that federally insured credit unions have parity with FDIC-insured institutions for escrow accounts such as Interest on Lawyer Trust Accounts (IOLTAs). Share insurance parity for these accounts has been a key aspect of NAFCU’s five-point plan for regulatory relief for credit unions.
Previously, credit unions have been at a competitive disadvantage compared to banks because they could not offer the same level of insurance on lawyers’ trust accounts, since not all clients of a lawyer were members of the credit union that held the trust. Now, under the new law, these accounts are insured to the limit allowed by the Credit Union Share Insurance Fund. From NCUA’s press release:
“Credit unions now have parity with banks and, effective immediately, can fully insure lawyers’ trust accounts up to $250,000 for each owner of the funds, which they could not do before,” Matz said. “An attorney who is a member of the credit union where the trust account is opened now has a choice of financial institutions for that trust account. This enhances public confidence in both the banking and the credit union systems now that federal share and deposit insurance programs administered by NCUA and the FDIC are the same.” (My emphasis)
Matz also said NCUA will make changes to its regulations to fully conform to the Act.