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CUNA concerned by Treasurys garnishment review requirements
WASHINGTON (6/21/10)--Credit Union National Association (CUNA) on Friday said that credit unions have serious concerns with a U.S. Treasury proposal that would implement statutory restrictions on the garnishment of federal benefit payments. The Treasury, the Social Security Administration, the Department of Veterans Affairs, the Railroad Retirement Board, and the Office of Personnel Management issued the proposal in April. The agencies said that the rule was a response to "recent developments in technology and debt collection practices that have led to an increase in the freezing of accounts containing federal benefit payments." Specifically, the Treasury proposal would “establish procedures that financial institutions must follow when a garnishment account order is received for an account in which there is a direct deposit of Federal benefit payments,” CUNA said. This would include requiring institutions to review the account history during the 60-day period prior to the receipt of the garnishment order. According to CUNA, many credit unions lack the data processing capability to conduct these reviews and would be distracted from their true goal of serving their members if the proposal became law. Credit unions that have the data processing capabilities necessary to execute these reviews “may not have the capability to review a 60-day historical period,” CUNA added. CUNA has suggested that the Treasury modify its rules by allowing financial institutions to “use a flat amount that the account holder would have access to, such as the lesser of $2,200 or the balance in the account,” rather than imposing an across the board 60-day review requirement. The $2,200 figure was considered by the agencies as a possible alternative to the proposal, although they did not indicate how this thresold was determined. CUNA in the comment letter also spoke in support of portions of the proposal that would not require financial institutions to undertake additional reviews if funds are transferred from a primary to a secondary account. For the full comment letter, use the resource link.


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