Secretary Robert E. Rubin
Department of the Treasury
15th and Pennsylvania Avenue
Washington, D.C. 20220
Dear Secretary Rubin:
The undersigned community, consumer, labor and faith-based organizations are
writing to express our concerns about the fact that the voluntary account provided
in the proposed rule on EFT 99 (31 CFR 208) does not provide even minimal protections
for the unbanked recipients of federal benefits. By choosing to not
regulate the voluntary accounts opened by recipients just for the purpose of
complying with this new law, many of the poorest recipients of federal payments
will be subjected to high costs and abusive practices. We are writing now to
ask that you revise the regulations to require all accounts established for
the purpose of receiving federal payments electronically be required to be accessible
through financial institutions at a reasonable cost, with consumer protections.
It is also essential that you ensure that Treasury's planned public education
campaign fully notifies recipients of all their options.
Regulations Do Not Comply with the Law. Despite Congress' instruction to Treasury
to "ensure that individuals required . . . to have an account at a financial
institution . . . have access to such an account at a reasonable cost; and .
. . are given the same consumer protections . . . as other account holders"
Treasury has failed to specify even minimum standards for the voluntary accounts
opened by recipients to comply with the law. The law does not require Treasury
to regulate all depository accounts -- only those established by recipients
in response to the requirement of EFT 99.
Only financial institutions -- banks, credit unions and savings associations
-- should be permitted to be conduits for federal moneys. Partnering between
a check casher and a bank should not be permitted (see attachments). The regulation
must prohibit the deposit of federal payments into accounts which are effectively
accessible only through fringe bankers. The recipient should be able to access
the federal payment in his or her neighborhood through ATMs and POS devices
made available by the financial institution.
In addition, we believe that it is essential that Treasury require that the
fees charged for these new accounts be reasonable in relation to the federal
payment and the features of the account, and that consumer protections apply
to the transaction from the point the federal payment is deposited in the account
until the recipient withdraws the funds.
The public education campaign should provide ALL the information. Treasury
is launching an ambitious public education campaign to encourage, cajole and
scare federal recipients into voluntarily setting up accounts. People who are
outside the financial mainstream will be vulnerable to the abusive practices
of fringe bankers who may enter into partnerships with the banks to build up
a captive customer base. Those recipients will have no assurance that they can
access their money through a federally insured and regulated 7financial institution.
Further, there are no limits on the costs of these accounts or related services,
and no requirement that federally established consumer protections will apply
to the electronic access to their benefits.
To be fair, the public education campaign must inform recipients that the U.S.
Government will make the ETA account available to all federal recipients,
and that, if electronic banking causes either a financial or other recognized
hardship, recipients will be allowed to continue to receive their paper checks.
It is folly for Treasury to assume that low income recipients will close an
account into which their federal payments are made -- even if the account is
too expensive or otherwise has abusive terms -- just for the purpose of qualifying
for a waiver or the ETA account. That is a cumbersome and complex process for
any of us, let alone those who are not comfortable with mainstream financial
institutions. It is essential that Treasury allow the financial hardship waiver,
as well as the ETA account to everyone who claims to need either, whenever they
make the claim, and the public education campaign inform recipients of these
rights.
We would like to meet with you at the earliest possible date to discuss these
concerns in more detail. Thank you for your attention.
Sincerely,
ACORN
AFL-CIO
American Federation of State, County and Municipal Employees
Center for Community Change
Consumer Action
Consumer Federation of America
Greenlining Institute
National Community Reinvestment Coalition
National Consumer Law Center
National Housing Law Project
National People's Action
Neighborhood Economic Development Advisory Project (NEDAP)
Organization for A New Equality
21st Century Group
United Auto Workers
Woodstock Institute
U. S. PIRG
Urban League
Analysis of Costs Incurred With Bank One Electronic Account
Monthly on a $500 payment:
Annual Fee ($12) $ 1.00
Deposit Fee 2.95
2% of $500 fee to cash check 10.00
Total $13.95
and NCLC