KOHL, BAUCUS, McCASKILL, GRASSLEY WELCOME CLEAR RULES TO KEEP BANKS FROM FREEZING BENEFITS FOR SENIORS, VETERANS
New Treasury regulations would prevent banks from freezing accounts that contain money from Social Security and Veterans' benefits
Washington, DC
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Today U.S. Senator Herb Kohl, Chairman of the Special Committee on Aging, was joined by
Senate Finance Committee Chairman Max Baucus (D-MT), Senator Claire McCaskill (D-MO), and Senate Finance Committee Ranking Member Chuck Grassley (R-Iowa) in applauding new proposed regulations from the U.S. Treasury Department and other federal agencies that will prevent banks from freezing accounts that contain money from Social Security, Supplemental Security Income (SSI) and veterans' benefits, ensuring seniors and veterans have access to vital income. 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 have worked to end this practice because it can often create a real 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, and in May of 2009
sent a letter to Treasury urging them to enact a rule clarification to end illegal freezing and garnishments. As a member of the Banking Committee, Senator Kohl
questioned Treasury officials on this issue, and required the Treasury Department to report on its progress in creating protections for beneficiaries
as part of the Appropriations process.
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