House Dems Call to Protect Americans’ Stimulus Checks from Private Garnishment

Rep. Judy Chu (D-Pasadena), Chair of the House Small Business Subcommittee on Investigations, Oversight, and Regulations, and Rep. Joseph Morelle (D-New York), sent a letter to Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig urging them to use existing regulatory authority to prevent financial institutions from garnishing the stimulus checks of Americans during the coronavirus crisis.

The stimulus checks were passed by Congress on March 27 as part of the CARES Act, to help all Americans weather the economic slowdown. But on an April 10 call, it was reported that an official with the Treasury’s Bureau of the Fiscal Service confirmed that banks would be free to garnish payments from deposits if they were owed an outstanding payment. Reps. Chu and Morelle issued the following statements:

“During this time of crisis, banks and other debt collectors should not be profiting at the expense of the most vulnerable,” Chu said. “But that is exactly what Treasury has given them the green light to do, by allowing them to garnish payments from direct deposits Congress intended to be used to stimulate the economy.”

Chu and Morelle were joined by 68 cosigners.

“Banks do not need this additional cash at the expense of taxpayers,” the letter states. “On March 15, the Federal Reserve lowered the rate for banks to borrow at the Discount Window by 1.5 percentage points and cut the reserve requirement ratio for banks to zero.

“These actions have increased bank liquidity. Instead, American families need these economic impact payments to help survive during the uncertain economic conditions caused by the COVID-19 pandemic. It is imperative that all eligible Americans receive these payments as soon as possible, and that they are not subject to garnishment by financial institutions and other private debt collectors. Once again, we urge you to use your existing regulatory authority to prevent such garnishment and ensure Americans receive their direct cash payments.”