FDIC Extends Full Insurance Coverage to IOLTA Accounts
– On November 21, 2008, the FDIC approved its final rule regarding the Temporary Liquidity Guarantee Program (TLGP), which included a provision extending unlimited FDIC insurance coverage to IOLTA. As initially drafted, the rule only provided unlimited coverage to non-interest bearing accounts. This could have posed a real dilemma for lawyers—participate in IOLTA and have a total of $250,000 FDIC insurance per client, per financial institution, or move the client funds to a non-interest bearing account and have full FDIC insurance, regardless of the amount of the deposit. Recognizing this problem and the potential for millions of dollars in IOLTA funding for civil legal aid that could be lost, the American Bar Association led the campaign advocating for full FDIC insurance coverage of IOLTA. A wide range of groups and individuals including the ABA, National Association of IOLTA Programs, National Conference of Bar Presidents, state bar associations and members of Congress provided more than 500 comments on the need for this coverage. All banks were automatically enrolled in the TLGP as of November 21st, but had the option to opt-out by December 5th. For more information, contact , Staff Counsel, ABA Commission on IOLTA, at email@example.com or 312/988-5771.