Trump gives banks approval to confiscate your $1,200 stimulus check

Trump gives banks approval to confiscate your $1,200 stimulus check

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The Treasury Department has agreed to allow U.S. banks to confiscate some or all of the $1,200 coronavirus relief checks to pay outstanding debts to the bank or to other creditors.

That’s beyond heartless given that the checks are being sent to Americans to help them cope with the financial fallout of the shutdown—and that the banks are being shoveled hundreds of billions of dollars separately!

According to David Dayen of The American Prospect, “the Treasury Department effectively blessed this activity on a webinar with banking officials last Friday.”

Nothing ‘precludes’ it

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The American Prospect was able to obtain an audio recording of the webinar. In the recording, The Chief Disbursing Officer at the Treasury Department’s Bureau of the Fiscal Service can be heard telling the bankers on the line that “there’s nothing in the law that precludes” them from seizing the lifeline funds that Congress has allocated to people during this crisis.

As Jeremy Funk, a spokesperson for the advocacy group Allied Progress puts it:

“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.”

Debt collection can wait

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Funk thinks debt collection can wait because Americans have much more important concerns at the moment.

“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,” said Funk. “Secretary Mnuchin needs to ensure that these $1,200 checks go straight into Americans pockets where they belong.”

Checks should start arriving via direct deposit any day now. However, many Americans may not see a single cent of their payment if their bank opts to seize it.

Congress left it up to Mnuchin

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While the payments are exempt from seizure from “federal or state agencies” (excluding child support), Congress did not specifically extend the exemption to privately held debt.

Dayen explains:

“The payments are defined as tax credits and not federal benefits, making them subject to ‘garnishment,’ in which a debt collector that wins a judgment in court can seize anything of value held by the debtor…Congress did give Treasury the authority under Section 2201(h) of the CARES act to write rules exempting the payments from private debt collectors.”

Secretary Steve Mnuchin has so far declined to protect Americans despite being urged to by state attorneys general and members of Congress.

Cruelty is the point

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Plenty of people on Twitter have been outspoken about this turn of events:

This post has been edited for clarity.

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