Wednesday, January 15, 2014

IOLTA Bill: Minimal Budget Impact

H.R. 3468, Credit Union Share Insurance Parity Act, would have an insignificant impact on the budget deficit over the next 10 years, according to the Congressional Budget Office (CBO).

Currently, Interest on Lawyer Trust Accounts (IOLTAs) are not insured by the National Credit Union Share Insurance Fund (NCUSIF). However, IOLTAs receive federal deposit insurance through the Federal Deposit Insurance Corporation (FDIC). H.R. 3468 would extend federal deposit insurance to include IOLTAs and similar escrow accounts housed within credit unions.

CBO notes that "enacting this legislation would increase the cost to the government of resolving some future credit union failure." However, those costs would be minimal and offset by other collections. In addition, CBO points out that any increase in costs to the NCUA would be offset by a decrease in costs to the FDIC as IOLTAs move from FDIC-insured banks to NCUSIF-insured credit unions.

Read CBO's analysis.

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