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Apr 14 2020

The Last Angry Moose

Like Bullwinkle J. I keep all my money stashed in my mattress so Market pertubations don’t disturb me much, however I am so off the grid I debate whether jumping through hoops is worth it.

From our good friend dday.

Your Coronavirus Check Is Coming. Your Bank Can Grab It.
by David Dayen, The American Prospect
April 14, 2020

This week, the $1,200 CARES Act payments Congress approved in response to the coronavirus crisis will begin to appear in Americans’ bank accounts. The funds will be wired to eligible recipients who previously authorized the IRS to post their refunds (or Social Security payments) through direct deposit. This will speed relief far more quickly than having the IRS mail a check, which could take up to five months.

But the money may not make it into the hands of those who need it to pay bills, buy food, or just survive amid mass unemployment and widespread suffering. Individuals might first have to fend off their own bank, which has just been given the power to seize the $1,200 payment and use it to pay off outstanding debt.

Congress did not exempt CARES Act payments from private debt collection, and the Treasury Department has been reluctant to exempt them through its rulemaking authority. This means that individuals could see their payments transferred from their hands into the hands of their creditors, potentially leaving them with nothing.

Banks would be first in line to grab the payments to offset a delinquent loan or past-due fees. Even if the individual thinks their account with that bank is closed, if the payments post there, the bank could conceivably use them to cover old debts.

The Treasury Department effectively blessed this activity on a webinar with banking officials last week. In audio obtained by the Prospect, Ronda Kent, chief disbursing officer with Treasury’s Bureau of the Fiscal Service, can be heard explaining that banks had posed questions to her about “whether these payments could be subject to collection from the bank to which the money is deposited, if the payee owes an outstanding loan or other payments to the bank.” She responded—twice—that “there’s nothing in the law that precludes that action,” while counseling that the banks’ compliance officers should consult with their legal offices about what policies their banks will implement. “You will want to know for your bank what your bank has decided to do,” Kent said.

An official at a financial institution who was on the call and wishes to remain anonymous said that Kent’s comments, translated from regulator-ese, mean: “We don’t want to say anything explicitly and are telling you to make a business decision.” In other words, the statement was a green light for banks to take advantage of the coronavirus crisis to collect prior debt.

“At a time when people are desperate to buy food, the idea that anybody would grab [the $1,200 payments], let alone the banks they trust with their money, is appalling,” said Lauren Saunders, associate director with the National Consumer Law Center.

Not that I’m telling you Banks are bad and evil, though they are.