Americans who desperately need the stimulus check they are entitled to via the CARES Act will be disappointed to hear that President Trump’s Treasury Department gave banks permission to seize the money to pay debt collectors or keep for themselves.
Under the law passed in March, Americans are set to receive $1,200 either by mail or direct deposit into their accounts so they can use it to pay bills during this difficult time. More than 16 million Americans can certainly use the relief since that’s the number of them that have filed for unemployment because the coronavirus brought the economy to a screeching halt due to social distancing and stay-at-home policies designed to prevent the spread of the virus.
Over half a million Americans have been infected and more than 24,000 are dead, so public health and safety are the top priority.
Without paychecks, millions of Americans are desperate for relief, even the meager relief offered by the stimulus checks because it means a month of rent can be paid and groceries can be bought, among other bills that are due.
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But instead of Americans getting that money, Trump’s Treasury has found yet another way to keep it from them.
The American Prospect‘s David Dayen reported this week that the scheme involves letting banks seize the money to pay debt collectors who lay claim to it, including the banks themselves if an account holder owes fees or some other debt to the bank.
“The Treasury Department effectively blessed this activity on a webinar with banking officials last Friday,” Dayen said.
According to the Prospect:
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.”
Here’s the audio via the Prospect:
This is a new low by the Treasury Department, which was recently forced to reverse a policy that would have kept many retirees from getting their stimulus checks.
Now all a debt collector has to do is request a person’s bank to intervene on their behalf to steal stimulus checks and give it to them instead to pay debts. Even banks can take the money if an account-holder owes money to them. The unsuspecting account-holder would then look at their balance to see if their desperately needed money has arrived only to find that their bank seized it to give it to someone else or kept it themselves.
It should be pointed out that Congress gave Treasury Secretary Steve Mnuchin the power to exempt payments from debt collectors, but he apparently refuses to exercise it, preferring instead to hurt as many Americans as he can because he gets off on people suffering.
— Nomi Prins (@nomiprins) April 14, 2020
“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,” consumer advocacy group Allied Progress spokesman Jeremy Funk said in response, Common Dreams reports. “It’s the middle of a pandemic. 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. Secretary Mnuchin needs to ensure that these $1,200 checks go straight into Americans’ pockets where they belong.”
Indeed he should. But given this administration’s disdain for the majority of Americans, it looks like there is more financial pain ahead for those who are struggling the most.
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