Credit Union Share Insurance Fund Parity Actby Representative Edward R. Royce
Posted on 2014-05-06
ROYCE. 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.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 3468 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``Credit Union Share Insurance Fund Parity Act''.
SEC. 2. INSURANCE OF AMOUNTS HELD ON BEHALF OF OTHERS.
Section 207(k) of the Federal Credit Union Act (12 U.S.C. 1787(k)) is amended-- (1) in paragraph (1)(A)-- (A) by inserting after ``payable to any member'' the following: ``, or to any person with funds lawfully held in a member account,''; and (B) by striking ``and paragraphs (5) and (6)''; (2) in paragraph (2)(A), by striking ``(as determined under paragraph (5))''; (3) by redesignating paragraph (5) as paragraph (6); and (4) by inserting after paragraph (4) the following: ``(5) Coverage for interest on lawyers trust accounts (iolta) and other similar escrow accounts.-- ``(A) Pass-through insurance.--The Administration shall provide pass-through share insurance for the deposits or shares of any interest on lawyers trust account (IOLTA) or other similar escrow accounts.
``(B) Treatment of ioltas.-- ``(i) Treatment as escrow accounts.--For share insurance purposes, IOLTAs are treated as escrow accounts.
``(ii) Treatment as member accounts.--IOLTAs and other similar escrow accounts are considered member accounts for purposes of paragraph (1), if the attorney administering the IOLTA or the escrow agent administering the escrow account is a member of the insured credit union in which the funds are held.
``(C) Definitions.--For purposes of this paragraph: ``(i) Interest on lawyers trust account.--The terms `interest on lawyers trust account' and `IOLTA' mean a system in which lawyers place certain client funds in interest- bearing or dividend-bearing accounts, with the interest or dividends then used to fund programs such as legal service organizations who provide services to clients in need.
``(ii) Pass-through share insurance.--The term `pass- through share insurance' means, with respect to IOLTAs and other similar escrow accounts, insurance coverage based on the interest of each person on whose behalf funds are held in such accounts by the attorney administering the IOLTA or the escrow agent administering a similar escrow account, in accordance with regulations issued by the Administration.
``(D) Rule of construction.--No provision of this paragraph shall be construed as authorizing an insured credit union to accept the deposits of an IOLTA or similar escrow account in an amount greater than such credit union is authorized to accept under any other provision of Federal or State law.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from California (Mr. Royce) and the gentleman from Colorado (Mr. Perlmutter) each will control 20 minutes.
The Chair recognizes the gentleman from California.
General Leave Mr. ROYCE. 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.
The SPEAKER pro tempore. Is there objection to the request of the gentleman from California? There was no objection.
Mr. ROYCE. 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.