The House Financial Services Committee marked up and passed legislation designed to ensure credit unions have parity with FDIC-insured financial institutions in relation to escrow accounts.
The Credit Union Share Insurance Fund Parity Act, which was introduced on Wednesday by Reps. Ed Royce (R-Calif.), Ed Perlmutter (D-Colo.), Gary Miller (R-Calif.) and Brad Sherman (D-Calif.), would amend the Federal Credit Union Act to provide share insurance coverage to funds held in a member account by a nonmember.
Both the Credit Union National Association and National Association of Federal Credit Unions have voiced support for the measure.
“Consumers often do not distinguish between the government backing on accounts at financial institutions,” NAFCU Vice President of Legislative Affairs Brad Thaler said, according to Credit Union Times. “It is important that the law dictate that there is no difference in coverage, so as not to favor one type of institution over another in the marketplace.”
CUNA pointed to a 2008 letter from the National Credit Union Administration on insurance coverage on Interest on Lawyers’ Trust Accounts.
“The accounts are those set up by lawyers at a credit union or bank to hold funds for their clients,” CUNA said, Credit Union Times reports. “Often, the interest accrued is paid to the state or the state bar association to fund legal services. CUNA has noted that the situation puts credit unions at a disadvantage to attract this type of account if all the clients must be members, rather than just the attorney establishing the account. CUNA has discussed the issue both on the regulatory and legislative fronts.”