WASHINGTON (11/15/13)--The House Financial Services Committee on Thursday approved legislation that would extend share insurance coverage to all of the underlying owners of funds held by lawyers in trust accounts and realtors in escrow accounts. The bill, known as the Credit Union Share Insurance Fund Parity Act (H.R. 3468), was approved by voice vote.
Thursday's approval of the share insurance legislation is a milestone: It marked the first time since 1998 that a stand-alone piece of pro-credit union legislation was passed through the committee. During the markup session, original co-sponsor Rep. Ed Royce (R-Calif.) noted CUNA's support of the bill and thanked committee Chairman Rep. Jeb Hensarling (R-Texas) and co-sponsors for their help in moving the bill forward.
Credit Union National Association Senior Vice President of Legislative Affairs Ryan Donovan said CUNA has encouraged Congress to address this issue since 2008. The issue is also part of CUNA's 35-point regulatory relief plan.
"We appreciate the bipartisan approach that this legislation was given. The committee and the bill's sponsors worked closely with us and with the National Credit Union Administration on the language, which helped facilitate passage of the bill," he added. "CUNA looks forward to the House considering the bill as soon as possible. We also hope that H.R. 3468 is the first of many regulatory relief bills to move through this committee," Donovan said.
Under the bill, National Credit Union Share Insurance Fund coverage would be provided for accounts such as Interest on Lawyers Trust Accounts (IOLTAs) so they are treated for deposit insurance purposes on the same basis as similar accounts insured by the Federal Deposit Insurance Corp. The bill would correct an NCUA interpretation of the Federal Credit Union Act that puts credit unions at a disadvantage. The NCUA has said that for full insurance coverage, all the clients must be members, rather than just the attorney establishing the account.