Gavin Newsom Now Just Trying To Get Into Our Pants

Tells debt collectors hands off Califonians' stimmy checks.

California's dreamy Gov. Gavin Newsom issued an executive order Thursday aimed at protecting Californians' stimulus checks from debt collectors, and also announced that he and other governors had negotiated a deal to allow people with private student loans to request a 90-day forbearance from payments, with no penalties. That's in addition to the existing forbearance option for federal student loans that Congress already included in the CARES Act last month.

We'd accuse Newsom of just trying to get us to move to California so we could vote for him, but since I grew up in two states that border California, I'm still not over my ingrained anti-California bias. Establish universal basic income, or healthcare or both, and we'll talk, Gavin.

The executive order prohibits debt collectors from garnishing the $1200 per adult federal stimulus payments from Californians' bank accounts. Further, if debt collectors have already swooped in and taken some or all of someone's loan, Newsom said, "You gotta give them back." The only exceptions under the executive order are for debts owed for child or spousal support, and for people required to pay restitution to victims of crimes.

Not surprisingly, bleeding heart liberals who work with the poor are semi-ecstatic at the announcement, at least as a first step.

Ted Mermin, who leads the California Low-Income Consumer Coalition, called [the] executive order "a necessary and very welcome measure."

The stimulus payments, he said, "were not intended to pay back old debt. They were intended to allow people to keep food on their table and a roof over their heads."

Mermin was less thrilled to note, however, that the order only applies to seizure of federal stimulus funds, and won't do anything to help people being hounded by debt collectors for other reasons. He urged Newsom to expand the order to offer broader relief from debt collection during the crisis.

In addition to preventing collection agencies from seizing funds, the order also prevents banks from grabbing late fees or other charges from the funds. Jessica Bartholow, a policy advocate with the Western Center on Law & Poverty, said she's heard from lots of folks who are frustrated that they can't access money they'd been counting on.

It's not always been clear why banks freeze people's accounts, she said. Debt collector levies could be one explanation, but so couldoverdraft fees, or because thecheck represents far more money than the individual has ever had in their account before.She said one woman had called in tears the night before. The woman had just moved out of a shelter with her daughter and needed the money from her stimulus check to pay for food and a microwave. Thebank had frozen it, and she didn't know why.

"Now we can let them know there are protections for them and their stimulus check will not be taken," she said. "For those low-income people who do have a bank account, this is a lifesaver."

It occurs to us somebody better tell the banks, too. They sometimes tend not to stay on top of little details like the law. Yes, call us cynical.

In addition, Newsom announced that he and a bunch of other governors reached an agreement with some major lenders to allow people to request a forbearance of 90 days on private student loans. Borrowers would have to request the forbearance, and the agreement prohibits lenders from charging late fees, reporting nonpayments to credit agencies, or attempting to collect debts on the loans that get forbearances. In addition, the companies agreed to help borrowers enroll in other assistance programs, too. The other states signing on to the agreement are Colorado, Connecticut, Illinois, New Jersey, Vermont, Virginia, and Washington. (Oregon, where the heck are you?)

Consumer Reports praised the agreement as a good first step that, combined with the federal forbearance agreement, means borrowers in those states will have temporary relief from both federal and private loans, but the organization also wagged a finger at companies that hadn't signed on to the agreement, which includes some very big players such as Wells Fargo, Discover, Sallie Mae, and PHEAA/FedLoan Servicing. Booo, Wells Fargo sucks, we've known that   all along, BOOOOOO.

Suzanne Martindale, Consumer Reports senior policy counsel, added that the deal would be a lot more reassuring if it included provisions to keep interest from accruing and to prevent borrowers from facing a "payment shock" at the end of the 90-day period. (Those three months shouldn't be due right away, either, but should be added onto the back of the loan.)

"The best way for us to move forward out of this is to ensure that people can keep some money in their pockets," she said. "The industry recognizes that we're not going to have an economy left if people don't get a break."

Well sure, but isn't the point to take everything you can grab right now and forget the future? What kind of crazy talk is "future" anyway?

In related news, We're still waiting to hear back from Newsom's office about our suggestion that California annex Idaho.

[ CalMatters / Gov. Gavin Newsom / California Dept. of Business Oversight / Consumer Reports ]

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