FDIC Federal Register Citations

Oak Creek Valley Bank

From: Oak Creek Valley Bank
Sent: Tuesday, September 25, 2007 6:20 PM
To: Comments

Subject: Garnishment Statement

As a community banker I certainly agree that “best practices” dictate that a bank customer subject to a garnishment be notified promptly when a garnishment is received and a freeze is placed on the account. Additionally, if the court issuing the garnishment makes a determination that a freeze is not permitted due to an account containing only exempt federal benefit funds, the bank should immediately release the freeze (however, the bank should and must rely on the court order and should not be making that decision on their own accord). However, I strongly disagree with the notion or suggestion regarding several other items indicated as “best practices” which require banks to make decisions in violation of a state court ordered Garnishment, or, in advance of the court making its decision. In my review of the best practices I see the following recommendations: Provide the consumer with information about what types of federal benefit funds are exempt, including SSA and VA benefits, in order to aid the consumer in asserting federal protections. This is akin to giving “legal advice” which a bank is not authorized to do. If SSA or VA benefits are awarded to an individual, SSA or the VA are certainly in a better position to provide that information to the individual than the bank who may or may not know the origin or purpose of the funds and should not have a duty to search out each deposit & check on a given account to trace funds to their origin. The SSA or VA should be in regular contact with the recipient and will know why the individual is receiving the benefit and what if any federal laws or protections apply. Promptly determine, as feasible, if an account contains only exempt federal benefit funds such as SSA or VA benefits. Again, a garnishment order will only occur if a civil judgment has been rendered in which the account holder has been provided notice as required by the Court. They will then receive further notice of the garnishment from the court and the Bank. My understanding is that the Garnishee can always petition the court for a hearing to determine the appropriateness of the garnishment. The bank is merely a disinterested third party holder of the funds and should not be made an active participant with the risks and liabilities associated with it. A state court is already “refereeing” the dispute between the creditor and the debtor and the bank should not be asked to intervene or be involved in that dispute beyond simply providing bank records if requested. It is not the banks job to decide what the law is and who is entitled to that money once it has received an order to freeze it, it is the courts. Additionally, the bank should be no less entitled to appropriate fees for the service it provides under its account relationship for the garnishment than it does for any other of its services. My experience has almost universally been that most, if not all, individuals who have had a judgment rendered against them are well aware of it. The more appropriate place for them to be made aware of their rights under the law would be from the agency providing them the federal benefit or from the state court during the court proceeding or from their own legal counsel. Simply because none of those entities do it, does not mean that the bank should be put in the position of attempting to do it when it is outside of the scope of its relationship with the customer. While many banks, mine included, would attempt to do many of these things to help “our customer”, that burden should not be placed on banks through any required regulatory channel.

Mark Blazek