S. 2699 — Introduced in Senate

II 113th CONGRESS 2d Session S. 2699 IN THE SENATE OF THE UNITED STATES July 30, 2014 Mr. King (for himself and Mr. Warner) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To require the National Credit Union Administration to provide pass-through share insurance for the deposits or shares of any interest on lawyers trust accounts, and for other purposes. 1. 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 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 (commonly referred to as 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 or 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. .