SD15 - The Feasibility of Requiring All Virginia Financial Institutions With Commonwealth Funds on Deposit to Cash Public Assistance Benefits Checks Without Charge

  • Published: 1991
  • Author: State Corporation Commission and Department of Social Services
  • Enabling Authority: Senate Joint Resolution 62 (Regular Session, 1990)

Executive Summary:
Senate Joint Resolution No. 62, (Appendix 1) passed by the General Assembly of the Commonwealth of Virginia in the 1990 Session, encouraged the Bureau of Financial Institutions of the State Corporation Commission and the Department of Social Services to conduct a joint study examining the feasibility of requiring all Virginia financial institutions with Commonwealth funds on deposit to cash public assistance benefits checks, without charge, subject to the obligation of the Commonwealth to indemnify such institutions from fraud-related losses resulting therefrom.

In the same resolution, the Department of Social Services was strongly encouraged to provide periodic notice to the public assistance recipients it serves of "... (ii) locations of financial institutions where public assistance checks can be cashed, and (iii) the availability of Department of Social Services photo identification cards to assist them in cashing their public assistance checks ... through envelope inserts accompanying public assistance checks ... "

The Department of Social services and the Bureau of Financial Institutions of the State Corporation Commission jointly studied the feasibility of requiring all Virginia financial institutions with Commonwealth funds on deposit to cash public assistance benefits, without charge, subject to the obligation of the Commonwealth to indemnify such institutions from fraud-related losses resulting therefrom. The staff working group representing the State Corporation Commission was comprised of: Sidney A. Bailey, Commissioner of Financial Institutions; Paul S. West, Regulatory Consumer Compliance Administrator for the Bureau of Financial Institutions; Ken Schrad, Director of Information Resources for the State Corporation Commission; Hunter Van Beggarly, Deputy Commissioner, Department of Social Studies; and John Vaughn, Executive Assistant, of the Department of Social Services.

The Bureau of Financial Institutions of the State Corporation Commission and the Department of Social Services have completed their study and hereby submit their findings and recommendations to the Governor and the General Assembly.

In undertaking and completing this study, staff of the State Corporation Commission and Department of Social Services reviewed work presently being conducted by the Department of Social Services relating to notice being given recipients of public assistance checks in response to Senate Joint Resolution No. 62, and to a project being conducted by the Department of the Treasury of the Commonwealth of Virginia and the Department of Social Services to determine the feasibility of electronic benefit payments, and to commitments made by Sovran Bank, NA, and Dominion Bank to cash the benefit checks for recipients at no charge. The State Banking Commission of the State of Connecticut was contacted and copies of the Connecticut statute and implementing regulations relating to the cashing of public assistance benefit checks without charge to the recipients were obtained for use as a model in the event the General Assembly felt legislation was warranted. (Copies of the statutes and regulations as well as testimony of Banking Commissioner, Howard B. Brown, in support of such legislation are attached hereto as Appendix 2.) A review of consumer complaints received by the Bureau of Financial Institutions for the last three years was made to see whether the inability to get public assistance benefit checks cashed or the charging of fees by financial institutions was a recurring problem. A list of commercial banks having Commonwealth funds on deposit was obtained from the Department of the Treasury, Commonwealth of Virginia, and Robert S. Young, CCM, Bank Services Manager of the Department of the Treasury, sent a letter in opposition to such legislation with his reasons therefore. (A copy of the list of commercial banks having Commonwealth funds on deposit is attached as Appendix 3, and a copy of Mr. Young's correspondence is attached as Appendix 4.) Questionnaires were sent to all Virginia commercial banks having Commonwealth funds on deposit. (A copy of the questionnaire is attached as Appendix 5.) Ongoing activity at the federal level was monitored by the staff relating to cashing of checks for public assistance recipients.