Protecting Social Security Benefits
from
Predatory Lending
and
Other Harmful Financial Institution Practices

June 24, 2008

Chairman McNulty, Congressman Johnson, Members of the Committee, thank you very much for
inviting me to testify about the escalating problems caused by bank freezing of exempt funds. In the past few years this issue has become one of the most alarming and frequent reasons for emergency requests for assistance to legal services lawyers all over the nation. I am here today, testifying on behalf of not only the low income clients of the National Consumer Law Center,1 but also on behalf of the following national organizations representing low income recipients of federal benefits –

• Consumer Federation of America
• Consumers Union
• National Association of Consumer Advocates
• National Legal Aid and Defender Association
• National Senior Citizens Law Center
• U.S. Public Interest Research Group.

In addition, I have gathered extensive information and advice on necessary and appropriate
resolutions to the problems affecting low income recipients of federal benefits from a number of local, multi-county, and statewide legal aid programs across the nation. Attorneys at the following legal aid programs, all of whom represent low income clients affected by these problems, have provided critical information as we have constructed our proposed recommendations to the federal agencies dealing with these issues, as well as in our discussions with members of Congress about these issues –

• Community Justice Project of Harrisburg, Pennsylvania
• Coordinated Advice & Referral Program for Legal Services of Cook County, Illinois
• Empire Justice Center of Albany, New York
• Jacksonville Area Legal Aid of Jacksonville, Florida
• Legal Aid Society of Minneapolis, Minnesota
• Legal Aid Society of Roanoke Valley of Roanoke, Virginia
• Legal Advocacy Center of Central Florida, Inc of Sanford, Florida
• Legal Assistance Foundation of Chicago
• Legal Services of New Jersey of Edison, New Jersey
• MFY Legal Services of New York, New York
• Mississippi Center for Justice of Jackson, Mississippi
• Mountain State Justice of Charleston, West Virginia
• Neighborhood Economic Development Advocacy Project (NEDAP) of New York, New York
• North Carolina Justice Center of Raleigh, North Carolina
• St. John’s University School of Law Elder Law Clinic of Queens, New York
• Virginia Poverty Law Center of Richmond, Virginia
• Washoe Legal Services of Reno, Nevada

You have asked me to address how the freezing of beneficiaries’ bank accounts in response to state
court garnishment orders on behalf of creditors implicates Section 207, the devastating impact
account-freezing can have on Social Security beneficiaries, and what policy responses might be taken stop or mitigate the practice. We very much appreciate your concern about these issues. Indeed it is the most vulnerable of our society – and those with the least power – who suffer daily as the result of the problems highlighted in this hearing.

For the full testimony, click here (PDF format).