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From: Patrick McCabe
November 12, 2008
VIA FASCIMILE (703) 516-1126 AND BY EMAIL
Ms. Sheila C. Bair Chair, Federal Deposit Insurance Corporation 550 17th Street, NW Room 6028 Washington, DC 20429
Dear Chairman Bair:
I am writing as an individual attorney who is interested in legal services to the poor and want to raise my concern about the potential unintended consequences to the Interest on Lawyers Trust Accounts (IOLTA) program associated with your announced Temporary Liquidity Guarantee Program (TLGP).
It is my understanding that under current TLGP implementation, the net effect will be very strong pressures on attorneys in private practice to move funds out of IOLTA accounts – pressures that would not exist if such accounts were deemed non-interest bearing and/or fully insured. The consequences of such an action would be serious.
Initially, and most importantly, the resulting flight from IOLTA accounts would decimate many public service programs throughout the nation reliant on IOLTA funds. As you may know, IOLTA funds provide a critical source of revenue for a variety of programs throughout the country. These programs are already strained in light of falling interest rates. Further strain would harm the precise segments of our communities in the most need of assistance – the aged, the poor, the disabled, the victims of domestic abuse, etc.
I urge the FDIC to consider IOLTA accounts as non-interest bearing accounts under the terms of the TLGP. This position is supported by the structure and purposes of the IOLTA program, as neither attorneys nor their clients have any expectation of receiving any interest (all interest being essentially donated for legal assistance purposes). If the FDIC cannot consider IOLTA accounts to be non-interest bearing, I would ask that an exception be made in the TLGP interim rules providing for unlimited deposit insurance to IOLTA accounts.
We appreciate your consideration of our request on such short notice. I would be happy to provide further information at any time.
Very truly yours,
Patrick D. McCabe
|Last Updated 11/13/2008||Regs@fdic.gov|