Sen. Max Baucus Holds a Hearing On Banks and Social Security Benefits

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Sen. Max Baucus Holds a Hearing On Banks and Social Security Benefits

U.S. SENATE FINANCE COMMITTEE HOLDS A HEARING ON BANKS AND SOCIAL SECURITY BENEFITS

SEPTEMBER 20, 2007

SPEAKERS: SEN. MAX BAUCUS, D-MONT. CHAIRMAN SEN. JOHN D. ROCKEFELLER IV, D-W.VA. SEN. KENT CONRAD, D-N.D. SEN. JEFF BINGAMAN, D-N.M. SEN. JOHN KERRY, D-MASS. SEN. BLANCHE LINCOLN, D-ARK. SEN. RON WYDEN, D-ORE. SEN. CHARLES E. SCHUMER, D-N.Y. SEN. DEBBIE STABENOW, D-MICH. SEN. MARIA CANTWELL, D-WASH. SEN. KEN SALAZAR, D-COLO.

SEN. CHARLES E. GRASSLEY, R-IOWA RANKING MEMBER SEN. ORRIN G. HATCH, R-UTAH SEN. TRENT LOTT, R-MISS. SEN. OLYMPIA J. SNOWE, R-MAINE SEN. JON KYL, R-ARIZ. SEN. GORDON H. SMITH, R-ORE. SEN. JIM BUNNING, R-KY. SEN. MICHAEL D. CRAPO, R-IDAHO SEN. PAT ROBERTS, R-KAN. SEN. JOHN ENSIGN, R-NEV.

WITNESSES: WAVERLY TALIAFERRO, SOCIAL SECURITY BENEFICIARY FROM NEW YORK WHOSE BANK FROZE HIS SOCIAL SECURITY BENEFITS

SARA KELSEY, GENERAL COUNSEL, FEDERAL DEPOSIT INSURANCE CORPORATION

MONTRICE YAKIMOV, MANAGING DIRECTOR FOR COMPLIANCE AND CONSUMER PROTECTION, OFFICE OF THRIFT SUPERVISION, DEPARTMENT OF TREASURY

JULIE WILLIAMS, FIRST SENIOR DEPUTY COMPTROLLER, CHIEF COUNSEL, OFFICE OF THE COMPTROLLER OF THE CURRENCY, DEPARTMENT OF TREASURY

MARGOT SAUNDERS, COUNSEL, NATIONAL CONSUMER LAW CENTER

[*] BAUCUS: The hearing will come to order.

The Book of Leviticus teaches: "You must not cheat your neighbor or rob him. You must not keep a hired worker's salary all night until morning."

Our hearing today will look at a modern application to this ancient rule. We will examine the case where banks are keeping Social Security beneficiaries' payments far longer than all night, far longer than until morning.

The Social Security law sets forth a rule much like that in Leviticus. The Social Security law says, "None of the monies paid ... under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal purposes."

In other words, Social Security benefits are protected. No one can garnish your Social Security check. And that goes for Social Security benefits deposited electronically in bank accounts. Those benefits are protected, too.

But here's what's happening. A creditor alleges that a Social Security beneficiary owes the creditor money. The creditor goes to court. Sometimes the beneficiary really owes the debt. Sometimes the beneficiary does not. But it is not always easy for old or disabled people to get to court to fight the creditor.

State courts routinely issue orders allowing creditors to freeze assets prior to garnishing funds to pay the alleged debt. The creditor then sends the court order to every bank in the state. The order instructs the bank to freeze some or all of the beneficiary's bank deposits as a first step towards garnishing the funds at a later date.

Generally, banks will not give the beneficiary a chance to prove that the funds in the bank account are from Social Security or another protected benefit. So, the bank freezes the money. And to make ma...

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