New FDIC Rule Creates Unlimited Protection for IOLTA Accounts

The Federal Deposit Insurance Corporation (FDIC) announced on November 21, 2008,  that effective immediately client funds deposited in IOLTA accounts at participating financial intuitions are eligible for unlimited deposit insurance coverage as part of the Temporary Liquidity Guarantee Program (TLGP).  All funds in an IOLTA account, regardless of size, will now be insured in full by the FDIC and backed by the full faith and credit of the United States Government, as part of the Temporary Account Guarantee (TAG) provisions of the TLGP. Financial institutions opting out of the TAG coverage must display a notification to customers. The additional coverage is in effect until December 31, 2009, unless extended. Full text of the final Rule can be found at:   http://www.fdic.gov/news/board/08BODtlgp.PDF

For a list of financial institutions that have opted out of the TLGP: http://www.fdic.gov/regulations/resources/TLGP/optout.html

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The Colorado Lawyer Trust Account Foundation (COLTAF) administers Colorado's Interest on Lawyer Trust Accounts (IOLTA) program. This program is an innovative partnership between the legal community and the banking community, whereby the interest on lawyers' pooled trust accounts is used to make grants to improve access to civil justice statewide. IOLTA programs operate in all fifty states and in the District of Columbia, and are an increasingly critical piece of the funding picture for civil legal services for the poor.

COLTAF was established in 1982 by the Colorado Supreme Court, in response to severe cuts in federal funding for legal services. From 1982 through 2008, COLTAF has made grants in excess of 25.5 million dollars. Approximately 80% of these funds have gone to Colorado's federally-funded legal services programs. The other 20% have gone to bar-sponsored pro-bono programs, domestic violence programs, and other justice-related organizations.

COLTAF's only source of revenue is the interest earned on COLTAF accounts at banks across the state. Therefore COLTAF's ability to provide resources for a vital community purpose is entirely dependent on banks waiving fees on COLTAF accounts and paying strong COLTAF interest rates.  Lawyers can support COLTAF by maintaining their COLTAF accounts at one of COLTAF's Leadership Banks.