In an age where banks are dodging lawsuits from every angle, they have found a way to seize money from customers’ accounts causing concern not only from consumers, but from congress. As if the American people weren’t hurting enough, some banks have been seizing Social Security, disability, veteran and pension benefits from account holders in order to pay off debts, despite federal regulations protecting such funds. A group of legislators has been pressuring the Treasury Department to close the loophole that allows these heinous acts. According to the Wall Street Journal, a bipartisan group of legislators is pressing the Treasury Department to close a loophole that has allowed banks to seize Social Security and disability benefits from customers’ accounts despite federal rules intended to protect these benefits from creditors.
The loophole also has enabled some banks to seize from customers their recent $250 Economic Recovery Payments, payments to disabled veterans, and supplemental benefits to impoverished individuals from the Social Security Administration.
Federal law says creditors can’t take Social Security, disability, veterans’ and children’s survivor benefits to pay a debt. But the federal law doesn’t say how money deposited directly into bank accounts is to be protected—a gap that has given banks the ability to seize such funds. Why is it that banks line up to accept federal bailout money, then are reluctant to account for where the money went, find loopholes in the law to seize SSD money, then don’t want to be accountable for either?