New FDIC Rule to Extend
IOLTA Accounts’ Unlimited Insurance
at Participating Banks for at Least Six More Months
On April 13, 2010, the FDIC Board met and approved an interim rule further extending the Transaction Account Guarantee (TAG) Program of the Temporary Liquidity Guarantee Program for at least six months beyond June 30, 2010. Comments on the interim rule were due by May 19, 2010. Under the interim rule, IOLTA accounts will continue to be fully guaranteed by the FDIC, without limit, for participating financial institutions.
In November 21, 2008, the FDIC adopted a final rule creating the Temporary Liquidity Guarantee Program (TLGP), including the Transaction Account Guarantee (TAG) Program, in order to “strengthen confidence and encourage liquidity in the banking system by guaranteeing newly issued senior unsecured debt of banks, thrifts, and certain holding companies, and by providing full coverage of non-interest bearing deposit transaction accounts, regardless of dollar amount.” In response to advocacy by the American Bar Association, the National Association of IOLTA Programs and many other organizations and individuals, the category of non-interest bearing transaction accounts included IOLTA and functionally equivalent accounts, and provided for unlimited insurance for such accounts held in participating financial institutions through December 31, 2009.
On September 1, 2009, the FDIC amended the Temporary Liquidity Guarantee Program (TLGP), extending the Transaction Account Guarantee Program (TAG) for six months, until June 30, 2010. On April 13, 2010, the FDIC Board met and approved interim rules extending the TAG Program. Comments on the interim rule are due by May 19, 2010. Under the interim rules, the program is to be extended to December 31, 2010, with the option of a further one year extension by the FDIC without the need for further rule making, if the FDIC determines that economic conditions warrant extension. IOLTA accounts continue to be fully guaranteed, without limit, for participating financial institutions. Financial institutions can opt-out by April 30th; if a financial institution does not opt-out by that date, it must remain in the program until it ends, either December 31, 2010 or December 31, 2011.
IOLTA funds held in institutions that opt out of the extended TAG Program (or that opted out previously) will be insured up to $250,000 per owner (i.e. client) until December 31, 2013. Institutions are required to prominently display their status as either participating or not participating.
The FDIC maintains a list of institutions that opted out of the TAG coverage at: http://www.fdic.gov/regulations/resources/TLGP/optout.html.
For more information regarding the TAG Program, go to www.fdic.gov.
