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House Dems Call to Protect Americans’ Stimulus Checks from Private Garnishment

April 16, 2020
Press Release

WASHINGTON, DC — Today, Rep. Judy Chu (CA-27), Chair of the House Small Business Subcommittee on Investigations, Oversight, and Regulations, and Rep. Joseph Morelle (NY-25), led a letter to Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig urging them to use existing regulatory authority to prevent financial institutions from garnishing the stimulus checks to Americans during the coronavirus crisis. The stimulus checks were passed by Congress on March 27, 2020, as part of the CARES Act, to help all Americans weather the economic slowdown. But on an April 10 call, it was reported that an official with the Treasury’s Bureau of the Fiscal Service confirmed that banks would be free to garnish payments from deposits if they were owed an outstanding payment. Reps. Chu and Morelle issued the following statements:

“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.”

“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.”

Reps. Chu and Morelle were joined by 68 cosigners including Reps. Don Beyer, Earl Blumenauer, Suzanne Bonamici, André Carson, Joaquin Castro, David Cicilline, Gilbert R. Cisneros, Jr., Katherine M. Clark, Yvette D. Clarke, Steve Cohen, Jim Cooper, Danny K. Davis, Peter A. DeFazio, Diana DeGette, Suzan K. DelBene, Mike Doyle, Eliot L. Engel, Veronica Escobar, Adriano Espaillat, Dwight Evans, Tulsi Gabbard, Sylvia R. Garcia, Jahana Hayes, Brian Higgins, Pramila Jayapal, Henry C. “Hank” Johnson, Jr., Eddie Bernice Johnson, Marcy Kaptur, Joseph P. Kennedy, III, Daniel T. Kildee, Andy Kim, John B. Larson, Barbara Lee, Sean Patrick Maloney, Carolyn B. Maloney, James P. McGovern, Gwen Moore, Jerrold Nadler, Grace F. Napolitano, Eleanor Holmes Norton, Alexandria Ocasio-Cortez, Ilhan Omar, Jimmy Panetta, Chris Pappas, Bill Pascrell, Chellie Pingree, Mark Pocan, Mike Quigley, Jamie Raskin, Kathleen M. Rice, Cedric L. Richmond, Lucille Roybal-Allard, Tim Ryan, Jan Schakowsky, José E. Serrano, Terri A. Sewell, Adam Smith, Darren Soto, Jackie Speier, Thomas R. Suozzi, Mark Takano, Dina Titus, Rashida Tlaib, Paul D. Tonko, Xochitl Torres Small, Nydia M. Velázquez, Bonnie Watson Coleman, Susan Wild.

The letter is available online here and included below.


The Honorable Steven Mnuchin


U.S. Department of the Treasury

1500 Pennsylvania Ave NW

Washington, DC 20510


The Honorable Charles Rettig


Internal Revenue Service

111 Constitution Ave NW

Washington, DC 20224


Dear Secretary Mnuchin and Commissioner Rettig:


We write to insist that you use your existing regulatory authority under Section 2201(h) of the CARES Act (P.L. 116-136) to prohibit financial institutions from garnishing the economic impact payments to taxpayers to pay debts owed, ensuring that taxpayers receive their direct cash payments as Congress intended.


On March 27th, 2020, Congress passed the CARES Act, the largest economic stimulus bill in American history. The CARES Act included economic impact payments intended to help Americans weather the disruption in our economy caused by the COVID-19 pandemic, regardless of the amount of debt they hold. However, The American Prospect reports that on April 10, 2020, Ronda Kent, Chief Disbursing Officer with Treasury’s Bureau of the Fiscal Service, participated in a call and responded to a bank’s question about “whether these payments could be subject to collection from the bank to which the money is deposited, if the payee owes an outstanding loan or other payments to the bank.” Kent reportedly answered — twice — that “there’s nothing in the law that precludes that action,” while counseling that the banks’ compliance officers should consult with their legal offices about what policies their banks will implement. This response implies that banks could seize the recovery rebates of those who have outstanding debts or owe other payments to their banks, some of the most vulnerable in our country.


Banks do not need this additional cash at the expense of taxpayers. On March 15, the Federal Reserve lowered the rate for banks to borrow at the Discount Window by 1.5 percentage points and cut the reserve requirement ratio for banks to zero. These actions have increased bank liquidity. Instead, American families need these economic impact payments to help survive during the uncertain economic conditions caused by the COVID-19 pandemic. It is imperative that all eligible Americans receive these payments as soon as possible, and that they are not subject to garnishment by financial institutions and other private debt collectors. Once again, we urge you to use your existing regulatory authority to prevent such garnishment and ensure Americans receive their direct cash payments.