In a letter sent to Senate Committee on Banking, Housing, and Urban Affairs chairman Tim Johnson and ranking member Mike Crapo, the American Bar Association urges that the committee move S. 2698 and S. 2699 to the Senate and work with Senator Harry Reid to bring it to a floor vote. The legislation, which has already passed in the House, would provide credit unions with the same amount of insurance protections that funds held in interest on lawyers trust accounts (IOLTAs) at banks enjoy ($250,000 per person per institution). The vast majority of states require lawyers to place client funds in IOLTAs if the funds cannot earn interest for the client in excess of the costs incurred to secure that interest.
The revenue from IOLTAs is a significant source of funding for programs providing legal services to the poor in the United States, with close to 90 percent of grants awarded to legal aid offices and pro bono programs. All 50 states have IOLTA programs, which provide financial support for legal aid to people at or near the poverty line, including veterans, the working poor and persons with disabilities.
"IOLTA programs provide funding for critically needed legal services across the country," ABA President William C. Hubbard said. "This legislation would benefit those programs by potentially creating additional revenue for them and would benefit lawyers and their clients by providing additional protection for client funds."
The ABA believes that client funds should be protected regardless of whether the IOLTA is in a credit union or in a bank
