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As the Florida Legislature prepared to adjourn last week, two pieces of legislation that would have changed how much interest banks pay on specific trust accounts held by lawyers quietly died.
The bills — House Bill 1253 and Senate Bill 1336 — called for the state’s CFO to set the interest rate banks pay on Interest on Trust Accounts program accounts on a quarterly basis, capping what banks have to pay at 2.55%.
The change would have affected how much money is generated to help fund legal aid organizations statewide.
According to bill tracking websites for both the Senate and House, the two pieces of legislation died March 8 — the same day the Legislature adjourned this year’s session.
HB 1253 died in the Insurance & Banking Subcommittee. SB 1336 died in the Appropriations Committee on Agriculture, Environment, and General Government.
Changing how much interest is charged on the IOTA accounts pitted lawyers against bankers on an obscure rule that impacts special accounts attorneys across Florida hold in banks.
The legislation was filed by two Vero Beach legislators in response to a Florida Supreme Court rule passed last year that changed the minimum banks must pay on those IOTA accounts and tied the rate to an indexed rate of between 3.25% and 4.99%.
Bankers argued the change cut into their bottom lines by forcing them to pay more for accounts with a heavy transaction load. The Florida Bar, which wrote the new rules the banks questioned, countered that the new rules give banks an incentive to bring in more business by offering higher yields.
The IOTA money is earmarked for Florida residents who are at or below 125% of the poverty level.
According to Funding Florida Legal Aid (formerly The Florida Bar Foundation), the state Supreme Court requires that all nominal or short-term funds belonging to clients or third persons be deposited into interest-bearing checking accounts. But the interest earned cannot be deposited back into the accounts. Instead, the funds go to FFLA to be distributed, in large part, to provide legal assistance for the poor.
The court implemented the program in 1981.
According to FFLA, it collected $45.5 million from the IOTA program during fiscal year 2022-2023 and in December the organization’s board approved $33.8 million in IOTA funds for 35 legal aid organizations as well as monies for other programs.
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