Leahy Praises FDIC Decision To Give
Full Deposit Insurance
To Lawyers’ Trust Accounts
WASHINGTON (Monday, Nov. 24, 2008) – Senator Patrick Leahy (D-Vt.)
Monday praised a decision by the Federal Deposit Insurance Corporation
(FDIC) to protect the Interest on Lawyers’ Trust Accounts program
(IOLTA), which helps support legal services for those in need. The
rule, which was approved on November 21, provides full deposit insurance
coverage to lawyers’ trust accounts under the Temporary Liquidity
Guarantee Program (TLGP).
Earlier this month, Leahy joined with 17 Senators, including Senator
Bernie Sanders (I-Vt.), to urge FDIC Chair Sheila Bair to provide the
insurance coverage to IOLTA accounts. The IOLTA program
distributes interest on client funds held in lawyer trust accounts to
critical legal aid programs. However, an interim rule threatened
to cap insurance for interest bearing accounts, including lawyers’ trust
accounts, at $250,000. Many lawyers’ trust accounts contain pooled
client funds in excess of $250,000. Leahy and other Senators urged
the FDIC to exclude IOLTA accounts from this rule so that lawyers were
not compelled to deposit client funds in non-interest bearing accounts.
“Vermont’s IOLTA program has benefited many low income Vermonters in
need of legal advice,” said Leahy. “The FDIC’s decision to fully
insure deposits to lawyers’ trust accounts across the country is an
important step towards preserving the success of this important
program.”
The
Vermont IOLTA program was first approved in 1984. A 1990 revised
rule required Vermont law firms and lawyers to deposit pooled client
trust funds in IOLTAs to benefit the Vermont Bar Foundation, which uses
the funds generated from IOLTA accounts for legal services for low
income Vermonters. Leahy has also been a long-time supporter of
the Legal Services Corporation, a government-funded organization that
provides civil legal assistance to low income Americans.
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