Wisconsin Lawyer: FDIC includes IOLTA in unlimited deposit insurance under Temporary Liquidity Guarantee Program:

State Bar of Wisconsin

Sign In

Top Link Bar

News & Pubs Search

Advanced
  • Wisconsin Lawyer
    December
    04
    2008

    FDIC includes IOLTA in unlimited deposit insurance under Temporary Liquidity Guarantee Program

    Share This:
    On Nov. 21 the FDIC clarified the Temporary Liquidity Guarantee Program to include Interest on Lawyer Trust Accounts. Consistent with its mission to ensure stability in the banking community, the FDIC has acted to protect client funds and assure continued funding for programs that provide legal aid to poor people when economic uncertainties make the need for legal guidance most critical. As a result of this action, an individual client’s funds deposited in IOLTA are fully insured regardless of the amount.

    Wisconsin LawyerWisconsin Lawyer
    Vol. 81, No. 12, December 2008

    FDIC includes IOLTA in unlimited deposit insurance under temporary liquidity guarantee program

    On Nov. 21 the Federal Deposit Insurance Corporation (FDIC) clarified the Temporary Liquidity Guarantee Program to include Interest on Lawyer Trust Accounts (IOLTA). Consistent with its mission to ensure stability in the banking community, the FDIC has acted to protect client funds and assure continued funding for programs that provide legal aid to poor people when economic uncertainties make the need for legal guidance most critical. As a result of this action, an individual client’s funds deposited in IOLTA are fully insured regardless of the amount.

    "The WisTAF board has been watching this issue very carefully and has been attempting to disseminate accurate information to attorneys considering FDIC coverage of IOLTA trust accounts," says WisTAF board member John E. Bermingham, Oshkosh. "This ruling clarifies the protection available to individual clients within an attorney or law firm's IOLTA Trust account. I am pleased that our clients' funds are fully protected."

    The ABA, working with state and local bar associations and individual lawyers nationwide, made a persuasive case to the FDIC why IOLTA funds must be included 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. Abandoning IOLTA would have been catastrophic for IOLTA programs in all 50 states, which provide funding for legal aid for the poor. Moving the accounts to larger banks would have defeated the FDIC’s purpose in creating the TLGP.

    FDIC Press Release and final rule

    ABA Statement