Unsanitized: Mnuchin knew two weeks ago that financial predators could grab emergency coronavirus checks (TAP)

First Response

Treasury Secretary Steven Mnuchin was told directly in a phone call on April 1 that the $1,200 CARES Act payments to individuals were not protected from private debt collection. Senator Sherrod Brown (D-OH), ranking member of the Senate Banking Committee, informed Mnuchin that the payments could be garnished by private debt collectors, or used by banks to offset existing debts that an individual had with their financial institution.

The payments are going out this week, two weeks after Mnuchin was first informed about the issue. And under the CARES Act, the Treasury Department has the ability to write rules protecting that payment from being taken by financial actors. But Treasury has done nothing of the sort. On Tuesday the Prospect reported that a top Treasury official, on a webinar with bank compliance officers, gave them an effective green light to use the CARES Act payments to offset debts, saying twice that “There’s nothing in the law that precludes that action.” The official also addressed garnishment by private debt collectors, which can commandeer payments if they have a judicial order, saying, “We do understand that concerns have been raised about this legal requirement, but it is a legal requirement at this time,” failing to add that Treasury can suspend that legal requirement through regulatory action.

“On a call with Secretary Mnuchin on April 1, Senator Brown raised the garnishment issue to Secretary Mnuchin, who at the time was not aware of the issue,” according to a statement from Senator Brown’s office. Mnuchin negotiated the CARES Act directly, and it passed a week before Brown confronted him over the garnishment issue. So Mnuchin claimed in this phone call that, a week after crafting the legislation, he was unaware of how CARES Act payments, intended to provide food, medicine, and basic necessities to millions of Americans in an emergency, could instead pass into the hands of creditors…

To read the entire article from The American Prospect, click https://prospect.org/coronavirus/unsanitized-mnuchin-knew-banks-coronavirus-checks/