Credit Union Share Insurance Fund Parity Act

Madam Speaker, I thank my friend, Mr. Royce of California, for his remarks, and I yield myself such time as I may consume. As I say: ``Two Eds are better than one.'' So we will start with that.

This bill is designed to create parity between certain accounts held at credit unions and those held at FDIC insured banks.

As a preliminary matter, I introduce into the Record six letters.

The first is a letter dated September 17, 1996, signed by Richard Schulman, the associate general counsel of the National Credit Union Administration.

Second is a letter dated October 8, 2008. That is from Sheila A. Albin, associate general counsel.

A letter dated May 6, 2014, from the American Bar Association, signed by the president, James R. Silkenat.

A letter dated May 5, 2014, signed by Brad Thaler of the National Association of Federal Credit Unions.

A letter dated May 5, 2014, signed by Bill Cheney, president of the Credit Union National Association.

And finally, a letter signed by Scott Earl from Mountain West Credit Union Association.

September 17, 1996.

Re Interest on Lawyers Trust Accounts (``IOLTA''), (Your

August 22, 1996, Letter)

Elyse E. Rogers, Esq.,

Mette, Evans & Woodside,

Harrisburg, PA.

Dear Ms. Rogers: In your letter, you requested our opinion

as to whether Pennsylvania attorneys can maintain client

trust funds, in association with Pennsylvania's IOLTA

Program, in share draft accounts at credit unions regulated

by the National Credit Union Administration. As discussed

below, the answer depends upon the credit union membership

status of the clients whose funds are contained in the IOLTA

account.

Specifically, the bill extends insurance coverage to Interest on Lawyer Trust Accounts, as Mr. Royce said, and I will call those ``trust accounts or similar escrow accounts,'' those that are held at credit unions that are otherwise fully insured at FDIC-insured banks up to $250,000.

As a practicing lawyer for 25 years, I know Lawyer Trust Accounts in Colorado as COLTAs, or Colorado Lawyer Trust Accounts, which we established for our clients so that interest can be earned for various charities that might exist. For instance, legal aid which provides assistance to veterans or people involved in domestic violence situations.

Under our bill, if a credit union were ever to fail and needed to be resolved, then the client funds held in an escrow account would be insured and thus protected, regardless if the beneficiary is a member of the credit union or not. In my instance, if I had a trust account which had a number of different clients, some clients might be members of the credit union, others are not. Only those under current law that are members of the credit union are covered by share insurance. Those that are not members of the credit union are not covered. So we are trying to stop this differentiation between banks and credit unions.

Currently, the NCUA's regulations and legal opinions as established in 1996, which is one the letters we are introducing today, do not allow Federal deposit insurance equal to the coverage provided by the FDIC for accounts held by credit union members that contain funds owned by one or more nonmembers.

IOLTA accounts often contain funds from many clients, some of whom may not be members of the particular credit union where the attorney or the escrow agent has opened the account.

With an IOLTA account or other escrow accounts held in trust, under current law, the membership status of the client/beneficiary, and not of the agent or the attorney, is determinative as to whether an IOLTA account can be properly maintained. In order for a law firm or a real estate escrow company to maintain an IOLTA account at a credit union, either all of the clients whose funds would be deposited must be members of that credit union or the credit union must be designated as a low-income, which would allow it to accept nonmember funds.

Many States or bar associations require the funds in an IOLTA to be fully insured, meaning a lawyer may not be able to use a credit union for these accounts if they can't be fully covered.

It is important to note that this legislation should not be seen as an authorization to take nonmember deposits beyond the current regulatory limits, nor should it be seen as an authorization for the NCUA to increase those thresholds.

What we have before us today is a negotiated compromise. The language as introduced in the manager's amendment narrowly defines which accounts will be extended Credit Union Share Insurance Fund coverage. This includes IOLTA/COLTAFs and other escrow accounts held in trust.

I thank my friend from California for bringing this legislation. It is time that there be parity and that all of the clients be covered by the Share Insurance Fund.

I urge quick passage of H.R. 3468, the Credit Union Share Insurance Fund Parity Act.

I yield back the balance of my time.

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 3468) to amend the Federal Credit Union Act to extend insurance coverage to amounts held in a member account on behalf of another person, and for other purposes, as amended.

Madam Speaker, I ask unanimous consent that all Members have 5 legislative days in which to revise and extend their remarks and to include extraneous materials on the bill, H.R. 3468.

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

I rise in strong support of the Credit Union Share Insurance Fund Parity Act. This is a bill which passed out of the Financial Services Committee on a voice vote. This is bipartisan, commonsense legislation. The bill is supported by the Credit Union National Association, the National Association of Federal Credit Unions, the California and Nevada Credit Union Leagues, as well as the American Bar Association.

What this bill does is to ensure that there is parity in the treatment of trust accounts covered by the National Credit Union Share Insurance Fund and the Federal Deposit Insurance Corporation, the FDIC.

The Financial Services Committee has heard the testimony of credit unions from West Virginia to Texas that:

There is no public policy reason for deposit insurance

purposes to distinguish credit union interest on lawyer trust

accounts (IOLTAs) from those insured by FDIC. It is essential

for the NCUA's share insurance fund to be treated identically

in order to maintain parity between the two Federal insurance

programs.

Specifically, the bill amends the Federal Credit Union Act to require that pass-through share insurance coverage be provided when a credit union member holds funds on behalf of a nonmember in an IOLTA or other similar account.

Unlike FDIC coverage, currently the National Credit Union Administration treats funds held by credit union members on behalf of those who are not federally insured credit union members as not covered by the National Credit Union Share Insurance Fund. This has created, of course, a disparity in coverage, specifically when looking at IOLTAs and prepaid debit master accounts.

Part of the mission of credit unions from their very beginning has been to reach out to the community around them, especially to reach out to the underserved. Maintaining a strong commitment to the IOLTA community and removing a barrier to greater participation sustains that very mission.

I urge my colleagues to support this bill, a bill which corrects a technical disparity between the way trust accounts are federally insured at credit unions and at banks.

I look forward to the statement of the other Ed, the gentleman from Colorado, my friend, who has been a champion of this important bill.

I reserve the balance of my time.

Madam Speaker, I yield back the balance of my time.

Mr. Speaker, on Tuesday, May 6, 2014, I was at home in Wisconsin taking care of my wife and our new baby daughter. Had I been present, I would have voted in the following ways:

1) H.R. 3584--The Capital Access for Small Community Financial Institutions Act of 2013--Yea

2) H.R. 2672--CFPB Rural Designation Petition and Correction--Yea

3) H.R. 4386--Money Remittance Improvement Act of 2013--Yea

4) H.R. 3329--To enhance the ability of community financial institutions to foster economic growth and serve their communities, boost small businesses, increase individual savings, and for other purposes--Yea

5) H.R. 3468--The Credit Union Share Fund Insurance Parity Act--Yea

6) H.R. 2919--The Open Book on Equal Access to Justice Act--Yea

7) H.R. 4292--The Foreign Cultural Exchange Jurisdictional Immunity Clarification Act--Yea

Mr. President, I ask unanimous consent that the Banking, Housing, and Urban Affairs Committee be discharged from further consideration of H.R. 3468 and the Senate proceed to its immediate consideration.

I further ask unanimous consent that the bill be read a third time and passed and the motion to reconsider be considered made and laid upon the table with no intervening action or debate.

The bill (H.R. 3468) was ordered to a third reading, was read the third time, and passed.