URGENT: IOLTA and FDIC Issue Affects Funding

November 12, 2008

Dear Friends,

Many legal services programs across the country rely on IOLTA (lawyers trust fund account programs) funds to represent immigrants because of Legal Services Corporation funding restrictions. Letters from attorneys are needed immediately. Here are some urgent messages related to possible funding impact on IOLTA programs that the recent bail out mess will affect if not changed:

Hello IOLTA Executive Directors and Directors of Litigation & Advocacy –
My apologies for duplicate postings!

A very time-sensitive HEADS UP – an inadvertent impact of the recent federal financial bail-out is a program that may lead many attorneys to move their IOLTA accounts to NON-interest bearing accounts in order to access the increased FDIC insurance.

The ABA has been leading a national campaign to encourage modification to this program (described below in more detail) for IOLTA accounts. PIC has been working closely with Stephanie Choy at the State Bar to obtain “dear colleague” letters from the CA delegation to the agency in support of this modification– with good success! (And many thanks to those of you who have already helped out with that particular effort).

PIC was advised by the ABA and NLADA that they do NOT want letters from individual IOLTA-funded programs. To our understanding, that is STILL the case.

However, it appears from the email below that letters from attorneys in the private bar (so perhaps your board members!) would now be helpful. The timing is VERY tight – the deadline is tomorrow, Thursday 11/13. If you have time to contact your board members about doing letters, that would be wonderful.

We will keep you posted as we hear more from the ABA!
Julia R. Wilson
Executive Director
PIC & LAAC

Dear Access to Justice Colleagues,
We have an urgent request for your assistance as we advocate for full FDIC insurance coverage of IOLTA accounts. As you may be aware, the FDIC announced its Temporary Liquidity Guarantee Program (TLGP) and issued interim regulations last month under which unlimited FDIC insurance was extended to non-interest bearing transaction accounts. The unintended consequence of this action is that a client’s total funds in one financial institution including the amount in an IOLTA account exceeding $250,000 are eligible for unlimited insurance only if they are moved to a covered “non-interest bearing deposit transaction account.”
The American Bar Association and others are seeking inclusion of IOLTA in the unlimited FDIC insurance coverage of the TLGP. We are now asking for your help with these efforts, but time is of the essence: The deadline to submit comments to the FDIC is November 13, 2008.
To help with this effort, you can:
(1) Ask ATJ Board Members and other lawyers in your community to submit comments to the FDIC.
Please ask lawyers to share their experiences, interest in this issue, and concerns. Please give examples of the public good that results from the IOLTA funds and potential consequences of IOLTA not being included in the TLGP, e.g. ethical dilemmas for lawyers in mandatory states, loss of critical legal aid funding. The attached ABA one-pager can help lawyers formulate their personalized remarks. Comments can be submitted on the FDIC website or by e-mail as follows:
• Agency Website: http://www.fdic.gov/regulations/laws/federal/propose.html
TLGP listing is at bottom of page titled “Open for Comments.”
• E-mail: Comments@FDIC.gov
Include RIN # 3064–AD37 on the subject line of the message.
(2) Please coordinate with ABA Governmental Affairs Office.
Please send copies of messages sent by your board members or others to Julie Strandlie at jstrandlie@staff.abanet.orgThank you very much for your assistance!