Bi-Partisan Senators Join to Keep Banks from
Freezing Accounts with Social Security Funds
Democratic Senators Kohl, McCaskill, Baucus joined by
Republican Grassley to push for new Treasury regulations protecting
seniors, veterans
April
17, 2010 In a rare expression of bi-partisanship, Republican Senator
Chuck Grassley joined with three Democratic senators this week to
applaud new regulations proposed to prevent banks from freezing accounts
containing money from Social Security, Supplemental Security Income or
veterans benefits to ensure seniors and veterans have access to vital
funds.
U.S. Senator Herb Kohl (D-WI), Chairman of the
Special Committee on Aging, was joined by a member of his committee -
Senator Claire McCaskill (D-MO) and both leaders of the powerful
Senate Finance Committee Chairman Max Baucus (D-MT) and Sen. Grassley
of Iowa, the Republican leader.
The spoke in favor of regulations from the U.S.
Treasury Department and other federal agencies that will prevent banks
from blocking senior citizens and veterans from access to their funds.
Though current law prohibits banks from freezing
and garnishing accounts that contain Social Security and veterans'
benefits upon creditors' requests, the lack of clear regulations for
banks has resulted in the freezing of many accounts containing these
critical benefits.
The senators say they have worked to end this
practice because it can often create a serious hardship for
beneficiaries who depend on those benefits each month.
"This rule clarification will ensure that banks can
no longer stand between seniors and their rightful benefits. We're glad
to see this Administration prioritize the protection of beneficiaries,"
said Kohl.
"Americans pay into Social Security their entire
lives, and when the time comes, they have a legal right to access those
benefits," Baucus said. "The Administration's proposal is a welcome step
toward ending these outrageous practices and protecting the benefits
seniors and veterans depend on to make ends meet."
"The point of Social Security is to help provide a
safety net for older Americans, especially when times are tough,"
McCaskill said.
"It's ridiculous to think people who've worked hard
all their lives and paid into the Social Security system wouldn't be
able to access their benefits when they need it most. This is a problem
we've been working on since I came to Washington, and I'm glad to see
the Treasury Department setting out regulations that will help uphold
the law and protect our seniors."
"Social Security benefits are supposed to be
protected from debt collectors. People who need that income for food
and shelter are meant to have access to it, even as they pay off debts,"
Grassley said.
"These changes are intended to strengthen current
law to be clear that banks are not allowed to freeze protected federal
benefits, causing harm to beneficiaries and forcing the beneficiaries to
try to remove the freeze after the damage has already been done."
The senators have long pressed for regulations that
will protect social security beneficiaries and veterans from having
their benefits frozen, employing various oversight and legislative
strategies as they work with relevant federal agencies to establish
these regulations.
In August of 2007, Senators Baucus, Kohl and
McCaskill asked the SSA Office of the Inspector General (SSA-OIG) to
survey banks in order to determine how widespread the illegal
garnishments were. The
Inspector General estimated in July of 2008 that about $178 million
were subject to illegally garnishment annually.
In September 2007, Senators Baucus and Grassley
held a Finance Committee hearing entitled, "Frozen
Out: A Review of Bank Treatment of Social Security Benefits," to
examine the issue, calling officials from the Treasury Department, the
Federal Deposit Insurance Corporation (FDIC), the National Consumer Law
Center as well as a Social Security beneficiary to testify before the
Committee.
In November of that year, Senators Baucus,
Grassley, Kohl and McCaskill were joined by Senators Christopher Dodd
(D-Conn.), Richard Shelby (R-Ala.), John Kerry (D-Mass.) and Senator
Gordon H. Smith (R-Ore.) in sending a
letter to the Office of Management and Budget requesting a
multi-agency approach to ending these practices.
In March of last year, Senators Kohl and McCaskill
introduced the
Illegal Garnishment Prevention Act (S. 906), a bill to prevent the
Treasury Department from promoting the use of direct deposit for Social
Security beneficiaries until Treasury put a stop to the illegal
garnishment of government benefits, In May of 2009, he sent a
letter to Treasury urging a rule clarification to end illegal
freezing and garnishments.
April
17, 2010 In a rare expression of bi-partisanship, Republican Senator
Chuck Grassley joined with three Democratic senators this week to
applaud new regulations proposed to prevent banks from freezing accounts
containing money from Social Security, Supplemental Security Income or
veterans benefits to ensure seniors and veterans have access to vital
funds.
