Court Opinion

ID: 7009968
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:02:56.69285+00
Date Added: 2024-06-11T16:10:11.144782
License: Public Domain

NOONAN, Circuit Judge,
concurring.
The opinion of the court is faithful to the Social Security Act and the relevant precedents. Recipients of Social Security who depend on their checks for necessities are protected. Who could dissent? Nonetheless, this fidelity to the law produces a result that is not happy. As Judge Trott observed in an analogous case, Crawford v. Gould, 56 F.3d 1162, 1169 (9th Cir.1995), the answer to the problem created by the Social Security Act and precedent lies with Congress.
The policy embodied in § 407(a) of the Social Security statute conflicts with another policy encouraging direct deposit that has received energetic support from the federal government in recent years. Congress, indeed, has mandated direct deposit for all federal wage, salary, and retirement payments. 31 U.S.C. § 3332. Although the requirement in particular cases may be waived, the desire of Congress to make the practice general is unmistakable. Direct deposits are a convenience to the bank customers and mean an elimination of paperwork for the federal government and the bank, as well as the elimination of the problems created by lost or stolen checks or forged signatures. It is regrettable that the two policies cannot accommodate each other.
Holding that a bank cannot touch a directly deposited Social Security check, we make overdraft protection virtually impossible for Social Security recipients. The customer is held to be prevented by law from assigning his Social Security check to a creditor. Despite footnote 4 in the majority opinion, section 407(a), as construed here, as surely applies to prevent any consent to a future assignment. Whenever a *999Social Security beneficiary overdraws his account and the bank pays it, the bank runs the risk of running afoul of § 407(a) if the bank covers its loss when the customer’s overdrawn account is replenished by a direct deposit. Faced with this risk, banks may not give overdraft protection to direct depositors of Social Security. These depositors, in turn, may abandon direct deposit.
This result is of dubious help to the great majority of Social Security recipients. Even this decision’s value to the present plaintiffs is not clear. Their damages appear to consist in the return of the money taken. That leaves them owing an equal amount to the bank. They ask for punitive damages. But why should puni-tives be awarded for a practice that appeared perfectly legitimate? Although not at issue in this case, the Treasury sees nothing illegal in a bank deducting certain fees and charges from an account containing Social Security deposits. See 64 FR 38510, 38513 (July 16, 1999). The real winners here are the plaintiffs’ attorneys, as plaintiffs asked for attorneys fees.