Requiring FDIC to Fully Insure Interest on Lawyers Trust Accounts

Floor Speech

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Mr. DOGGETT. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I thank the chairman and ranking member of the Financial Services Committee, Mr. Frank and Mr. Bachus; my colleague and member of the Financial Services Committee, Mrs. Biggert; as well as Leaders Hoyer and Boehner for their assistance in expediting the consideration of this measure.

When an attorney receives funds for use on behalf of a client, those funds are usually deposited in a trust account at some financial institution.

Many years ago, leaders in the legal community across America determined that interest could be earned on such accounts and applied to finance legal services for those who otherwise might have no access to our justice system. They recognized, as we do today, the wisdom of Judge Learned Hand's writing: ``If we are to keep our democracy, there must be one commandment--thou shall not ration justice.''

For decades, revenue from these Interest on Lawyer's Trust Accounts, or IOLTAs as they are commonly referred to, have provided a key funding source for the disadvantaged in all 50 States. Before coming to Congress, I served as a justice on the Texas Supreme Court, which sets forth the rules and oversees the operation of such IOLTA accounts in my State.

I saw firsthand the benefits of these programs in ensuring access to justice for those who otherwise might be unable to secure justice. Some of those who need legal assistance the most--veterans who have served honorably, domestic violence victims, and persons with disabilities--are too often the least able to obtain it. In some States, IOLTA funds are also used to reduce litigation by encouraging conflict resolution outside of the court system.

After hearing a few weeks ago from Terry Tottenham, who is the president of the State Bar of Texas, and after hearing from a number of other local leaders, I introduced this bill to assure continued full FDIC protection for these trust accounts. This protection, which exists today under existing law, would otherwise have expired for these accounts at the end of this year, when the existing law is to be fully replaced by the extensive new Wall Street reform law. Today's legislation simply extends existing Federal Deposit Insurance Corporation protection into the future.

At a time when interest rates are at an all-time low, it is particularly important that there be a complete government-backed guarantee against any loss on these trust accounts. Such protection also ensures that small, independent banks are on a level playing field with their larger competitors in securing these trust fund deposits. This bill is supported by a broad range of groups, including the Independent Community Bankers of America and the American Bar Association. I urge my colleagues to approve it.

I reserve the balance of my time.

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Mr. DOGGETT. Mr. Speaker, our colleague from Illinois has provided further explanation of the nature of this bill. It is a clean proposal. If we do not get this into law before the end of December, there will be some problems presented. So I would hope not only that we would approve it here but that the Senate would act promptly to approve this narrow bill without attaching any other extraneous matter to it.

In closing, I would also extend my thanks to both the Democrat and Republican staffs on the Financial Services Committee for working with us to see that this measure is promptly approved.

I would move adoption of the bill.

I yield back the balance of my time.

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