Social Security Offsets -- the Associations Fight Back
by Mary Beth Guard
On March 14, 2002, the 9th Circuit Court of Appeals shocked the banking world with its decision in the case of Lopez v. Washington Mutual Bank, Inc. The morning after the decision was handed down, BankersOnline published an article about the case, "Offsets Against Social Security Payments". The emails started rolling in and haven't stopped in the three months since, as BOL users have sounded off about the legal and practical issues posed by this decision.
Fortunately, the story doesn't end here. A Petition for Rehearing has been filed by the bank. In support of that petition, an amici curiae (friends of the court) brief has been jointly filed by the California Bankers Association, American Bankers Association, America's Community Bankers, Consumer Bankers Association, Independent Community Bankers of America, and Financial Services Roundtable. It is an incredible display of industry solidarity and the brief filed by these organizations is well-written and well-reasoned. If I were sitting on the Court, I'd buy their arguments!
They assert the Court's ruling:
will create costly and potentially insuperable operational problems for financial institutions;
will upset the highly successful efforts of the federal government to establish direct deposit as its preferred way of making payments;
will drive up the costs or reduce the availability of banking services to benefits recipients and other bank customers.
Supportive briefs have also been filed by the U.S. Treasury, Social Security Administration and Office of Thrift Supervision.
We don't know when the Court will make a decision about whether or not to grant rehearing. If it declines to do so, an appeal to the U.S. Supreme Court is possible. And there's always hope for a legislative remedy as well. We'll keep you posted. In the meantime, the industry owes a debt of gratitude to the entities who are fighting to reverse this troublesome ruling.
First published on BankersOnline.com 6/25/02
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