LSC President Applauds FDIC Decision on IOLTA
Wednesday, December 10, 2008
- Organization: Legal Services Corporation
Washington, DC - Helaine M. Barnett, president of the Legal Services Corporation, praised the Federal Deposit Insurance Corporation November 25, for moving quickly to insure the Interest on Lawyers' Trust Accounts (IOLTA) program, which helps fund civil legal aid programs across the nation.
IOLTA programs provide a significant source of funding for legal services organizations by collecting the interest from lawyers' client accounts and distributing the funds as grants. LSC-funded programs received $99.3 million in IOLTA funds during 2007.
"For legal aid organizations, IOLTA funding is critical to helping provide legal assistance to low-income individuals and families across the nation," Helaine Barnett said. "While interest rates on IOLTA accounts have dropped during the last two years, preserving these state-based programs is essential to assisting low-income Americans who need help with housing and family problems or other pressing civil legal matters."
Under the FDIC's rule, IOLTA funds, regardless of their amount, are eligible for full deposit insurance coverage under the Temporary Liquidity Guarantee Program, created last month because of disruptions in credit and lending markets. The FDIC said it received more than 500 comments that objected to the exclusion of IOLTAs from the guarantee program.
Barnett expressed LSC's thanks to the 17 senators and leaders of the American Bar Association and state and local bar associations who urged the FDIC to provide insurance coverage for IOLTA funds. Sens. Benjamin L. Cardin (D-Md.) and Arlen Specter (R-Pa.) organized a Senate letter on IOLTA sent to the FDIC. Sens. Tom Harkin (D-Iowa), Patrick Leahy (D-Vt.) and Jeff Sessions (R-Ala.) were among those signing the letter.
LSC is the largest single source of funding for civil legal services in the nation. For fiscal 2008, Congress appropriated $350.5 million for LSC programs and oversight. Grants were awarded to 137 programs with more than 920 offices across the nation.