Common Dreams – by Jake Johnson
President Donald Trump’s Treasury Department has given U.S. banks a green light to seize a portion or all of the one-time $1,200 coronavirus relief payments meant to help Americans cope with financial hardship and instead use the money to pay off individuals’ outstanding debts—a move consumer advocates decried as cruel and unacceptable.
“The Treasury Department effectively blessed this activity on a webinar with banking officials last Friday,” The American Prospect‘s David Dayen reported Tuesday.
In an audio recording from the webinar obtained exclusively by the Prospect, Ronda Kent, chief disbursing officer at the Treasury Department’s Bureau of the Fiscal Service, told bankers that “there’s nothing in the law that precludes” financial institutions from seizing a person’s payment and using it to pay off the individual’s debts.
“After a third of U.S. renters couldn’t make rent this month, the Treasury Department is pointing out opportunities for banks and debt collectors to steal Americans’ relief checks out from under them,” Jeremy Funk, spokesperson for consumer advocacy group Allied Progress, said in a statement responding to Kent’s comments.
“It’s the middle of a pandemic,” said Funk. “This money should be going toward food, rent, and medicine—it’s not the time to hand out favors to debt collection industry donors or pad some big bank’s bottom line,” said Funk. “Secretary Mnuchin needs to ensure that these $1,200 checks go straight into Americans pockets where they belong.”
Listen to the recording:
Americans with direct deposit information on file with the Internal Revenue Service are expected to begin receiving the $1,200 payments in their bank accounts this week, provided that their banks do not opt to seize the money.
Those for whom the government does not have direct deposit information—a group that is disproportionately low-income—could be forced to wait up to five months to receive paper checks in the mail.
The direct payments were authorized under the CARES Act, a massive coronavirus stimulus package President Donald Trump signed into law last month.
As Dayen explained, Congress explicitly exempted the one-time stimulus payments from collection under the CARES Act “if the debt is owed to federal or state agencies, unless the debt involves a child support payment.”
“But Congress did not extend this exemption to private debt collection,” Dayen wrote. “The payments are defined as tax credits and not federal benefits, making them subject to ‘garnishment,’ in which a debt collector that wins a judgment in court can seize anything of value held by the debtor.”
“Congress did give Treasury the authority under Section 2201(h) of the CARES Act to write rules exempting the payments from private debt collectors,” Dayen noted, but the Treasury Department—headed by former Goldman Sachs executive Steve Mnuchin—has thus far refused to exercise that authority despite pressure from Democratic members of Congress and state attorneys general.
I checked with the five largest consumer banks. Only JPMorgan Chase said they would not use CARES Act payments to offset debts. The other four gave no response. https://t.co/by1oQ1cNkL
— David Dayen (@ddayen) April 14, 2020
On Monday, Massachusetts Attorney General Maura Healey issued guidance stating that the $1,200 payments “are exempt from seizure or garnishment by creditors under Massachusetts law.”
“These payments are supposed to help individuals and families put food on the table during this crisis, not enrich debt collectors,” Healey said in a statement. “With this guidance… my office is putting the debt collection industry on notice that these payments are off limits.”
Healey on Monday also signed onto a letter (pdf) led by New York Attorney General Letitia James urging Mnuchin to issue “a regulation or guidance designating CARES Act payments as ‘benefit payments’ exempt from garnishment.” The letter was signed by 25 state attorneys general.
“During this public health and economic crisis, the states do not believe that the billions of dollars appropriated by Congress to help keep hard-working Americans afloat should be subject to garnishment,” the letter states.
Dayen noted that “legally speaking, banks have the right to ‘offset’ any deposits to pay off delinquent loans, overdraft fees, or other charges.”
“Banks have more immediate access to the coronavirus checks by virtue of having them deposited into accounts at their institutions,” Dayen wrote. “They’re also in front of the line for repayment of debts ahead of other private debt collectors.”
The possibility that banks could seize individuals’ relief payments as millions of people across the U.S. face layoffs, pay cuts, and reductions in work hours sparked outrage on social media.
“This is beyond predatory,” tweeted finance expert and investigative journalist Nomi Prins.
Banks win again: those $1,200 checks heading to your account? Banks can siphon off any amount you might owe them. @ddayen https://t.co/kNZUfuLrxP
— Bartlett Naylor (@BartNaylor) April 14, 2020
Absolutely obscene. A violation of every ounce of trust the people have in Congress.
This money is for food, medicine, housing. The essentials of life.
If private banks want to collect debts from our stimulus checks, we need to rethink banking. #HandsOff https://t.co/P8sZzTToHH
— Mike Siegel (@SiegelForTexas) April 14, 2020
Jess Scarane, a progressive running to unseat Sen. Chris Coons (D-Del.), tweeted that “this ‘stimulus’ gets worse and worse for working people every day.”
“Even the meager help we thought individuals would get can end up in the hands of banks,” said Scarane, “while people continue to struggle to put food on their tables and survive.”
Sadism is a symptom of an oppression reaching its peak.
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It’s all predatory. They are the predators and you are the prey.
Correct Katie! In nature the common denominator is that predators prey on the weak, the defenseless, the young, the old & the sick. Predators know that taking on a strong opponent could very easily mean their own demise. Yes they are predators & the strong in any family unit or clan have an unalienable right to take any & all threatening predators out BEFORE they do (any further) harm! This is NATURAL LAW unlike the pre-emptive BS practiced by Israhell against its neighbors & ALL perceived enemies including you & me.
So I wonder what the “go along to get along” deniers of “conspiracy theories just because” MAGA or “I’m with Her” idiots (because the more I hear about folks living in fear trusting a bunch o’ psychopaths to “help” them and ratting on their neighbors, the more disgusted I get at these people!) will do when they have no food, can’t wash their clothing because they can’t pay their electric bill or whatever, abuse their family members and possibly even eating their pets (Holodomor stuff), etc. Since I am NOT a defeatist, I just wonder what will be the spark for these folks? Maybe getting ripped off over this crapola “stimulus check” will light it…. Because there is only so much a person will take, even the deniers. Sometimes the darkest moments must happen before the light (and I can attest to that).
Police will soon be writing tickets again, once people get used to speeding. They will start before the end of this month, as every vehicle is a $1200 minimum revenue generator.
Jus’sayin’
Lol The sheeple are hoodwinked yet again.
When are people going to realize that NOTHING IS FREE and that if something is too good to be true, then it usually is?
We all knew this money was nothing more than a distraction for the peasants. The elites end game is to destroy the world economy any way they can. This is nothing more than a slap in the face.