Overdrawn? Late on your mortgage? Owe late fees to your bank or credit card company?
If you are expecting a coronavirus relief check, which most Americans are, up to $1200, be prepared to see a portion of it seized by the bank to pay off those debts.
The U.S. Department of the Treasury, headed by multi-millionaire Secretary Steve Mnuchin, has authorized banks to seize however much of your emergency coronavirus relief payment to pay off debts owed to your bank, according to The American Prospect’s Executive Editor David Dayen.
Congress passed the CARES Act to help the tens of millions of Americans who have been financially impacted by the coronavirus pandemic put food on their tables, pay their rent or mortgage – literally continue to live. Last week Mnuchin’s Treasury effectively told the banks it’s OK to seize what they deem you own them from those payments.
“Banks would be first in line to grab the payments to offset a delinquent loan or past-due fees,” Dayen reports. “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.”
While the Treassury didn’t tell banks to go grab the cash, Treasury regulators made clear they are welcome to do so, as Dayen explains:
“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.”
That’s how it works.
Basically, “we’re not telling you you can’t, so do as you please.”
One official told Dayen, “We don’t want to say anything explicitly and are telling you to make a business decision.”
Common Dreams notes Massachusetts Attorney General Maura Healey says the “payments are supposed to help individuals and families put food on the table during this crisis, not enrich debt collectors.”
Dayen says the Treasury Dept. could easily rescind this grant if it chose to.
Read the entire report here.