Frerichs Calls For End of Fed Loophole on Savings Bonds

By Benjamin Cox on December 17, 2019 at 9:30am

Illinois Treasurer Michael Frerichs is calling on U.S. Secretary of the Treasury Steven Mnuchin to release money tied up in mature U.S. Savings bonds to the rightful owners. As state treasurer, Frerichs is the unclaimed property administrator in Illinois. There is an estimated $1 billion in matured, unpaid U.S. savings bonds tied to Illinois families stuck in a federal loophole. The savings bonds could date to the 1930s when they were first made available for purchase. Frerichs is calling on Congress and President Donald Trump to close the loophole: “The federal government sits on that pile of money – $26 billion nationally and $1 billion here in Illinois – instead of returning it to the rightful owners. The federal government has the ability to pay these individuals and has simply chosen not do so. Our request is simple. Trump’s Treasury should render the money to each state so that in turn, each state can search for the beneficiaries and return that money to the rightful beneficiaries.”

Bonds that are surrendered to the state treasury, such as those found in an abandoned safe deposit box, are eligible to be reunited with their owner, which is the job of Frerich’s office as the unclaimed property administrator in the state. Bonds that are surrendered to the federal government do not fall under that restriction and are allowed to remain in possession of the government. Frerichs is calling for the closure of that specific loophole.

“There is an easy way for the President and Congress to solve this government-created problem, and that simply is to change federal law and close the loophole,” Frerichs said. “The Trump administration wastes enough of our money. It should not be allowed to block Illinois families from obtaining the proceeds of matured savings bonds.”

7th District Illinois Congressman Danny Davis is the lead Democratic cosponsor of legislation that would require the federal treasury to surrender the names of mature bondholders and the value of their bonds to each state’s unclaimed property administrator. In turn, the unclaimed property administrator would work to return the money to the proper owner or heir. House Resolution 5629 and its parent bill Senate Bill 2417 is currently both chambers of Congress for consideration.