Federal Deposit
Insurance Corporation

With regard to the proposed rulemaking  on the Garnishment of Exempt Federal Benefits Funds, this concept presents quite and puzzle as to how we as a commercial bank can effectively address it.  Most customers for whom we receive garnishments have accounts which contain commingled funds from various sources.  Admittedly there are likely some whose sole source of deposit funds are those that come under the definition of Federal Benefit Funds. However, to be responsive to a garnishment request issued by the court, it would present an added burden for us to have to research those accounts to determine the source of funds contained therein.  And if it determined that funds come from mixed sources (not all exempt) how are we to know which funds have already been spent in the course of the customers statement period? Are we to assume that if any funds are in the account they are exempt funds if the balance is sufficient to match the federal benefit or if the funds remaining are less than the federal benefit those are the balance remaining of the federal benefit and therefore not to be garnished?

Another part of the proposal suggests that we consider creating segregated accounts solely for federal benefit income sources and a separate account for non-specific funds. On it’s surface this would be the cleanest way to solve this problem, however, as a business we have a data servicer who assesses us $1.00 each month for processing each existing account which would increase our expense tremendously because like most commercial banks we have many customers who are on Social Security, SSI etc. And to accommodate the potential that any one of them could be garnished dual accounts would have to be developed.

Our present methods do typically include a “freezing” of the account up to the sum of the garnishment if such amount is available or for the full amount in the account if the balance is less than the garnishment.  Our method of notifying the customer is sending a copy of the order by mail to them and concurrently sending what funds we may have to the court. One would assume that any collection process which has proceeded to the point of garnishment is already something the customer is fully aware of.

We cannot be certain how some courts would appreciate an overlong delay caused by us having to research the source of funds, making direct contact to the customer or calling them to inform them they cannot get any of the funds we have on hand because we think they are exempt.

Bob Corbitt,
Vice President
Bartlett Farmers Bank