December 30, 2008
FDIC Agrees to Extend Unlimited Protection to IOLTA Accounts
Last month the Federal Deposit Insurance Corporation extended its unlimited protection of non-interest-bearing accounts under the Temporary Liquid Guarantee Program to include Interest on Lawyers’ Trust Accounts. As a result, clients’ funds deposited in IOLTA are fully insured regardless of the amount. The decision was applauded by the ABA, which joined the House Financial Services Committee, the Senate Banking Committee, more than 20 U.S. senators and other organizations representing lawyers nationwide in persuading the FDIC to include IOLTA in the expanded insurance program. "Had the FDIC failed to expand full coverage for IOLTA, lawyers would have had to consider abandoning IOLTA for fully insured non interest bearing accounts or moving IOLTA funds from community banks to the larger ‘too big to fail’ banks," noted ABA President H. Thomas Wells in a recent statement praising the FDIC’s actions. "Abandoning IOLTA would have been catastrophic for IOLTA programs in all 50 states, which provide funding for legal aid for the poor." Interest on IOLTA accounts are the second largest source of funding for legal services to low-income Americans.
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