Q: Offset of Deposits. Are Economic Impact payments subject to offset for charged-off loans or other obligations to the financial institution?
A: The CARES Act does not restrict banks from using economic impact payment funds to pay consumers’ old debts, e.g., delinquent loans or overdraft or other fees, where permitted by applicable law. However, the FDIC and other bank regulatory agencies have issued statements encouraging institutions to work with consumers and communities affected by COVID-19. For more information on assisting consumers in light of COVID-19 developments, see the FDIC’s Statement on Financial Institutions Working with Customers Affected by the Coronavirus and Regulatory and Supervisory Assistance (FIL-17-2020), issued on March 13, 2020.
COVID-19 related developments continue to evolve. We recommend that you monitor the U.S. Treasury Department’s website in the event it issues any new information addressing the offset of economic impact payments.
This Q&A was contained in the Frequently Asked Questions for Financial Institutions Affected by the Coronavirus Disease 2019 (Referred to as COVID-19) – As of March 3, 2021 (which may be updated from time to time). This may be found on the FDIC’s website here: https://www.fdic.gov/Coronavirus/faq-fi.pdf.