The House Financial Services Committee is set to mark up a bill on Thursday that would “amend the Federal Credit Union Act to extend insurance coverage to amounts held in a member account on behalf of another person.”
Rep. Ed Royce (R-Calif.) and Ed Perlmutter (D-Colo.) are expected to formally introduce the Credit Union Share Insurance Fund Parity Act, which has not been assigned a bill number yet.
“This is the first markup for credit unions this Congress and we hope it’s the first of many,” said CUNA Senior Vice President of Legislative Affairs Ryan Donovan on a conference call Monday.
CUNA noted that the NCUA issued an opinion letter about insurance coverage on Interest on Lawyers' Trust Accounts (IOLTA) in 2008.
“The accounts are those set up by lawyers at a credit union or bank to hold funds for their clients. Often, the interest accrued is paid to the state or the state bar association to fund legal services,” said a CUNA press release on Tuesday.
“CUNA has noted that the situation puts credit unions at a disadvantage to attract this type of account if all the clients must be members, rather than just the attorney establishing the account. CUNA has discussed the issue both on the regulatory and legislative fronts,” the release also said.
The committee is also marking up a companion bill, H.R. 3329. If ultimately signed into law, this legislation would “enhance the ability of community financial institutions to foster economic growth and serve their communities, boost small businesses, increase individual savings, and for other purposes.”
The bill would apply the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors to bank-holding companies with assets under $1 billion instead of the current $500 million limit.
CUNA has been speaking with the banking lobby about the importance of moving the legislation through Congress.
“It’s a baby step. We’re talking to bankers about pushing something together that hopefully will lead to bigger and better things,” said John Magill, CUNA executive vice president of government affairs.
“I think it’s a good beginning, we hope,” he added.
NAFCU, meanwhile, said it does not have a position on H.R. 3329, but did comment Tuesday on the trust account parity issue.
“NAFCU has long sought this parity in treatment between the FDIC coverage and the NCUSIF coverage, in particular this legislation would make it easier to cover IOLTA accounts at credit unions. This was a key element of NAFCU’s five-point plan on regulatory relief that we released earlier this year,” NAFCU Vice President of Legislative Affairs Brad Thaler told Credit Union Times.