REPRESENTATIVES MORELLE, CHU TAKE ACTION TO ENSURE AMERICAN FAMILIES RECEIVE FULL STIMULUS CHECKS
(Washington, D.C.) — Today, Rep. Joe Morelle and Rep. Judy Chu (CA-27), Chair of the House Small Business Subcommittee on Investigations, Oversight, and Regulations, led 70 of their colleagues in a letter to Treasury Secretary Steven Mnuchin and Internal Revenue Service (IRS) Commissioner Charles Rettig urging them to prevent financial institutions from diverting Americans’ forthcoming economic stimulus checks to pay off outstanding debt.
“Congress took action to provide much-needed relief for families struggling with the impacts of COVID-19 by authorizing direct cash payments to Americans,” said Rep. Morelle. “Reports that a loophole may allow banks to seize and redirect that payment to pay off debt are not only troubling, but run directly contrary to the intent of the legislation. I’m proud to join Congresswoman Chu in calling on the Department of Treasury to rectify this immediately and ensure families receive the full payments they need and deserve.”
“During this time of crisis, banks and other debt collectors should not be profiting at the expense of the most vulnerable. 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,” said Rep. Chu. “With businesses closing and the unemployment rate the highest it has been since the Great Depression, many American families are struggling to afford food or pay the bills. That is why Congress took such drastic action to provide the largest stimulus in history. To then take that money out of the pockets of those who need it is counterproductive, and leaves those who need help even worse off. These checks are intended to help families, not be a cash advance to private companies. We urge Treasury to act immediately to prevent these garnishments and put American families first.”
Direct payments to Americans were included as part of the CARES Act, passed by Congress last month, to help families weather the economic slowdown caused by COVID-19. But on an April 10 call, it was reported that an official with the Treasury’s Bureau of the Fiscal Service stated banks would be free to garnish payments from deposits if they were owed an outstanding payment.
Representatives Morelle and Chu led 70 members of the House of Representatives in calling on the Department of Treasury to use existing regulatory authority to prevent this diversion.
The full letter is below.