To require the Federal Deposit Insurance Corporation to fully insure Interest on Lawyers Trust Accounts.

Madam President, I rise to discuss and ask unanimous consent for consideration of H.R. 6398. I

will get to the unanimous consent language in a moment, but right now I want to describe what this is about. Then I wish to yield to my colleague from Georgia to add a little bit of the impact of this issue.

The issue is this: In all 50 States in America, lawyers have to put clients' funds into trust accounts. Under the law, they are not allowed to earn interest on these accounts. Over time, an arrangement has been worked out whereby the banks pay interest, but it does not go to the clients; it goes to fund civil legal services for those who cannot afford those services.

This arrangement is in great jeopardy if we do not pass this bill today. I will expand on that jeopardy in a moment, but at this point I simply am going to yield to my colleague from Georgia.

Madam President, I appreciate so much the partnership of my colleague from Georgia. He has laid out clearly the impact of a failure to fix this legislation on our community banks where lawyers, exercising their fiduciary responsibilities, would have to move their trust accounts out of these special accounts where the interest goes to legal services and legal education and into no-interest-bearing accounts so that no one gains from that movement. In the course of it, they would be moving funds often from community banks to other institutions, imperiling these community banks.

I wish to address the other side of this issue, which is the important work these funds do in all 50 States. I will speak specifically to the State of Oregon, but there are parallels because all 50 States participate with these accounts.

In Oregon, we have, first, the association of Oregon Legal Services Program, its primary source of civil legal assistance available to low- income Oregonians. To give a sense, if a woman is having a big challenge with domestic violence, she can get legal aid through this type of assistance. If a family is trying to struggle with a mistake on a foreclosure process so they can save their home, they can get assistance through this program. They have 20 offices throughout the State of Oregon to serve Oregonians living in poverty.

Second is the Juvenile Rights Project. This provides legal services to children and families through individual representation in juvenile court and school proceedings to help children who are in extraordinarily difficult circumstances.

A third is Disability Rights Oregon, the Oregon Advocacy Center, which assists those who are disabled, who are victims of abuse or neglect, or have difficulty acquiring health care or need to exercise their rights in regard to special education. They can turn to the Oregon Advocacy Center-Disability Rights of Oregon for help.

In addition, these funds pay for legal-oriented education for our K- 12 students. Let me give an example of three programs in Oregon. These programs assist 15,000 students in our State.

One is the High School Mock Trial Competition. This type of mock trial competition is an enormous learning exercise for our students in how our courts function and how the facts of a case are presented and how the principles of law are applied.

Then we have the summer institute training for teachers so that social studies teachers can learn more about the role of law and be more effective in conveying that vision to our students.

Then I also want to mention the We The People Program on the Constitution and Bill of Rights. Here in this Chamber, we discuss the Constitution and the Bill of Rights virtually on a daily basis. Virtually every day on this floor, we discuss how these founding documents affect how our laws are applied and how freedoms are protected in the United States of America. This program helps our children learn those fundamental principles. Sort of the heart and spirit of the American democratic world are conveyed through this We The People Program.

I also wish to commend a whole host of banks in Oregon that have agreed not only to pay interest on these lawyer trust accounts--and IOLTA stands for interest on lawyer trust accounts--but to pay 1 percent, which is above the going rate on most types of transaction accounts. They do that because they benefit from the deposits, and they know their communities benefit from these services and these programs.

This legislation will resolve a problem in which lawyers, applying their fiduciary responsibilities, would have had to withdraw their funds from these accounts and put them in other non-interest-bearing accounts, to no benefit to anyone and to a great deal of harm to so many.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 6398) to require the Federal Deposit Insurance Corporation to fully insure Interest on Lawyers Trust Accounts, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on this legislation and insert extraneous material herein.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I thank the chairman and ranking member of the Financial Services Committee, Mr. Frank and Mr. Bachus; my colleague and member of the Financial Services Committee, Mrs. Biggert; as well as Leaders Hoyer and Boehner for their assistance in expediting the consideration of this measure.

When an attorney receives funds for use on behalf of a client, those funds are usually deposited in a trust account at some financial institution.

Many years ago, leaders in the legal community across America determined that interest could be earned on such accounts and applied to finance legal services for those who otherwise might have no access to our justice system. They recognized, as we do today, the wisdom of Judge Learned Hand's writing: ``If we are to keep our democracy, there must be one commandment--thou shall not ration justice.''

For decades, revenue from these Interest on Lawyer's Trust Accounts, or IOLTAs as they are commonly referred to, have provided a key funding source for the disadvantaged in all 50 States. Before coming to Congress, I served as a justice on the Texas Supreme Court, which sets forth the rules and oversees the operation of such IOLTA accounts in my State.

I saw firsthand the benefits of these programs in ensuring access to justice for those who otherwise might be unable to secure justice. 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. In some States, IOLTA funds are also used to reduce litigation by encouraging conflict resolution outside of the court system.

After hearing a few weeks ago from Terry Tottenham, who is the president of the State Bar of Texas, and after hearing from a number of other local leaders, I introduced this bill to assure continued full FDIC protection for these trust accounts. This protection, which exists today under existing law, would otherwise have expired for these accounts at the end of this year, when the existing law is to be fully replaced by the extensive new Wall Street reform law. Today's legislation simply extends existing Federal Deposit Insurance Corporation protection into the future.

At a time when interest rates are at an all-time low, it is particularly important that there be a complete government-backed guarantee against any loss on these trust accounts. Such protection also ensures that small, independent banks are on a level playing field with their larger competitors in securing these trust fund deposits. This bill is supported by a broad range of groups, including the Independent Community Bankers of America and the American Bar Association. I urge my colleagues to approve it.

I reserve the balance of my time.

Mr. Speaker, our colleague from Illinois has provided further explanation of the nature of this bill. It is a clean proposal. If we do not get this into law before the end of December, there will be some problems presented. So I would hope not only that we would approve it here but that the Senate would act promptly to approve this narrow bill without attaching any other extraneous matter to it.

In closing, I would also extend my thanks to both the Democrat and Republican staffs on the Financial Services Committee for working with us to see that this measure is promptly approved.

I would move adoption of the bill.

I yield back the balance of my time.

I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 6398, which would extend the current Federal Deposit Insurance Corporation's, or FDIC's, guarantee of Interest on Lawyer Trust Accounts, also called IOLTAs, for another 2 years.

I would also like to thank my colleague from Texas (Mr. Doggett) for introducing this corrections bill to amend the Dodd-Frank Act.

The IOLTA program represents a significant source of financial support to civil legal aid programs for the poor. These programs operate in all 50 States. In 37 States, including my home State of Illinois, they are mandatory. IOLTAs contain client funds held by a lawyer for a short period of time. Interest generated from these accounts is paid to charitable organizations, not to the lawyer or the client.

In 1978, Florida was the first State to establish an IOLTA program. Illinois became the 11th State to establish IOLTAs, and in 1983, the Supreme Court of Illinois required that the interest from these accounts be collected and administered by the Lawyers Trust Fund, a not-for-profit corporation created in 1981 by the Illinois State Bar Association and the Chicago Bar Association. Since then, these funds have supported civil legal assistance to the impoverished in Illinois.

When State legislatures and State supreme courts created IOLTA, the FDIC carved out an exception to Regulation D that allowed the payment of interest on these demand accounts.

The current Term Asset Guarantee program, or TAG program, under which the FDIC guarantees the total amount of client funds maintained in IOLTAs, expires December 31, 2010. The Dodd-Frank Act creates an equivalent program, running for 2 years beginning January 1, 2011, but makes several changes, including a more narrow definition of a ``covered account.'' In what appears to have been a drafting error, IOLTAs were not covered under the new program established by the Dodd- Frank Act. This bill corrects that inadvertent omission so that IOLTAs are fully insured.

If the current guarantee were allowed to lapse, 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. In addition, according to the Independent Community Bankers of America, the ICBA, ``without this coverage, potentially hundreds of millions of dollars will be withdrawn from IOLTAs, adversely impacting liquidity in the banking system with a disproportionate impact on community banks.''

This bill is supported by the ICBA and the American Bar Association. The Congressional Budget Office has determined that, although the bill costs $15 million over a period of 5 years, the bill would raise $2 million over a 10-year period.

I again urge support for the legislation, and I yield back the balance of my time.

Madam President, I thank the Senator from Oregon. This is very important work, and we are in our late hour. Sometimes we do our best in the late hour.

The unintended consequence of the Dodd-Frank legislation with regard to IOLTA is it not being extended and we are going to literally have thousands of escrow accounts held by law firms and attorneys, real estate transactions, dispute resolution transactions, and beneficial programs that will have to be spread among many more banks because the insurance level, which is now limited, drops to $250,000. It would force the transfer of escrow account money out of any number of banks. At a time when capital is critical in small community banks, the unintended consequence might have been to take them below tier one capital requirements and put them in a stress situation.

I commend the distinguished Senator from Oregon for his work on this legislation. I thank the Senator from Louisiana, Mr. Vitter, for his consent for us to bring this forward. I give wholehearted support to the unanimous consent request.

I yield back to the Senator.

Mr. Speaker, I rise today in strong support of H.R. 6398, which I was proud to cosponsor with my colleague, Congressman Doggett. This important measure will ensure that lawyer trust accounts, the interest income from which goes to support legal services programs across this country, will be fully insured by the Federal Deposit Insurance Corporation, therefore providing to the providers of these programs an important assurance that going forward this source of funding will be protected.

For almost 20 years before I came to this body, I had the privilege of working with some of the finest legal services providers in the State of Maryland. And I want to thank them for the work they do every day to provide assistance to those underserved in our community. Every opportunity we get to support their work we should seize upon. And that's what we do with this measure. I thank my colleagues for their support of H.R. 6398.