November 24, 2008
NEW YORK STATE BAR ASSOCIATION PRAISES FDIC FOR EXTENDING DEPOSIT INSURANCE TO IOLA ACCOUNTS
Grassroots Efforts of Association Members Prove Essential in Winning Important Extension
New York State Bar Association President Bernice K. Leber (Arent Fox LLP) released the following statement praising the Federal Deposit Insurance Corporation's (FDIC) decision to extend unlimited insurance coverage to Interest on Lawyer Accounts (IOLA) under the FDIC's new Temporary Liquidity Guarantee Program (TLGP):
"The FDIC's decision to grant IOLA funds unlimited deposit insurance coverage is a resounding victory that protects precious funding that is so desperately needed in order to deliver vital civil legal services to the poor, not only in New York but also in the 36 other states that rely on interest generated from lawyer accounts. The FDIC's considerate action ensures the safety of client funds deposited in IOLA, regardless of the amount. With home foreclosures and evictions on the rise, and with a growing number of low-income people - from single mothers to the elderly - struggling to survive, we must continue to do everything we can to protect this critical source of legal funding. This announcement brings a ray of good news during these difficult economic times.
I applaud the members of our New York State Bar Association for their outstanding grassroots efforts in making the FDIC and our congressional leaders aware of this important issue. More than half the letters received by the FDIC came from members of the State Bar Association. We place the fight for access to justice for the poor among our top legislative priorities. Throughout New York and the nation, bar associations of all sizes, as well as individual lawyers and law firms, joined state and national political leaders in forming a bipartisan coalition that answered our call. I thank everyone for getting involved and for truly making a difference."
The FDIC's October 23 Interim Rule establishing TLGP provides full deposit insurance coverage on noninterest-bearing transaction accounts. In the weeks following that announcement, The New York State Bar Association and other representatives of the legal profession urged the FDIC to provide an exception to the final rule in order to provide unlimited insurance coverage for IOLA accounts so as not to adversely impact revenues generated by interest on those accounts for programs that provide legal services to the poor. On November 21, the FDIC's adopted the final rule that included an exception covering IOLA accounts.
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The 74,000-member New York State Bar Association is the largest voluntary state bar association in the nation. Founded in 1876, the Association's programs and activities have continuously served the public and improved the justice system for more than 130 years.