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FOR IMMEDIATE RELEASE

ICBA Welcomes New Guidance on Garnishing Federal Benefits; Calls for Flexibility

Washington, D.C. (Nov. 27, 2007)—The Independent Community Bankers of America (ICBA) welcomed proposed federal banking agency guidelines to help banks comply with conflicting state and federal requirements for garnishment of accounts that may include federal benefits exempt from attachment.

"ICBA welcomes the guidance proposed by the federal agencies about how banks should handle garnishment and attachment orders to minimize hardships on customers, especially since this area is fraught with potential liability and complexity," said Karen Thomas, ICBA executive vice president for government relations. "However, it is important that guidelines be optional and flexible so that community banks can tailor procedures to their own unique circumstances and to the requirements of state laws, which vary widely."

Regulatory guidelines should help banks deal with an increasingly awkward situation that puts banks between the customer and the state courts. Currently, banks must balance compliance with state law by following a state court order - the garnishment - while also complying with a federal exemption from garnishment for certain benefits such as Social Security payments. Since resolving these two conflicting demands may not always be a simple task, the easiest, safest and most straightforward approach for banks is to simply freeze the account and defer to the court to determine disposition of the funds.

ICBA also noted that since there are a variety of benefit programs, the agencies that provide the benefits, such as the Social Security Administration, should inform benefit recipients about their rights and obligations, including the exempt status of federal benefits. Those same agencies should also offer guidance for banks about the rights and responsibilities associated with federal benefit payments, including how to properly handle garnishments and attachments of accounts that may contain exempt federal benefits.

"Community banks want to respond to state court orders in the most appropriate manner," said Thomas. "Currently, community banks are caught between state court orders responding to legitimate debts, federal mandates and their customers. Any guidance that can help community banks respond to conflicting governmental requirements is welcome."

Read the complete letter at www.icba.org.