Business

Published — June 28, 2013 Updated — May 19, 2014 at 12:19 pm ET

IMPACT: Treasury to open Comerica deal to new bids after CPI report

Debit card program questioned

Introduction

The U.S. Treasury has agreed to consider hiring a new vendor when a controversial deal with Comerica bank to issue debit cards to beneficiaries of federal programs expires in 2015.

Comerica has an exclusive contract to issue Direct Express cards, which Treasury uses to deliver Social Security and other benefits to people who do not directlly deposit benefits into a bank account.

Treasury decided to solicit fresh bids and consider changing bank partners because of concerns that were first raised publicly in a report last week by The Center for Public Integrity, according to two people with direct knowledge of the matter. They spoke on condition of anonymity to avoid souring their relationships with Treasury.

CPI reported that Comerica won the original deal in 2008 by offering to provide the cards at no cost to taxpayers. About two years later, Treasury quietly amended the contract to add tens of millions in new payments to Comerica. The bank had complained that it was having trouble profiting under the financial terms to which it originally agreed.

Treasury’s inspector general, its independent, internal watchdog, is probing the deal. One core concern: Treasury failed to consider other banks when it added the compensation for Comerica. Comerica has received about $30 million in direct payments from Treasury, according to testimony at a congressional hearing. The amount will likely increase as more people sign up for Direct Express cards.

The deal also attracted scrutiny from the Senate Special Committee on Aging. At last week’s hearing, Democrats on the committee grilled Richard Gregg, Treasury’s Fiscal Assistant Secretary, about the deal’s lack of transparency and open competition.

Treasury’s special contracts with banks rarely are put out for competitive bidding—especially when a program is as new as Direct Express. A more typical example is Navy Cash, a system of stored-value cards and kiosks on ships and other closed government locations. JPMorgan was picked to run the program on a pilot basis in 1999. The Wall Street behemoth still holds the contract, worth roughly $18 million per year, after routine renegotiations and one “re-designation” by Treasury in 2003.

CPI found that Treasury has pressured people to use Direct Express, even if it exposed them to higher fees. The report also detailed the Treasury’s decision to give Comerica tens of millions of dollars in compensation that was not part of the original deal.

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sam fetters
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sam fetters

What do AT&T, Verizon and Crown Castle International Corp have in common? The largest institutional shareholders of each includes firms like: Vanguard, BlackRock, State Street (the “Big Three”), Invesco, Fidelity (FMR), JP Morgan, Wellington Management, Geode, T Rowe Price, Bank of America, and other of the largest money-management and investment firms, whom operate collaboratively (even comprising the largest shareholders of each other), forming virtual monopolies amongst the largest “competing” corporations, in most every single industry, via large share holdings. (source = http://investors.morningstar.com/ownership/shareholders-major.html?t=CCI) These are the same firms whom also largely own the third largest telecom, T-Mobile. The own the largest… Read more »

Jello Beyonce
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Jello Beyonce

I’ve a theory that the supposed “Trade Wars” and “sanctions” and political/military strife going on between the U.S., China, Russia, etc. are merely distractions, serving to divert attention away from the growing authoritarianism and Oligarchic control spreading across the globe. “Nationalism” is being used as a propagandist covert means of continued increasing Globalism. As this article states: “A Russian woman stood up to speak at one of these public meetings, and she said that when she lived in Russia, the government slam dunked her and she had no say,” King said. “Now she lives in the United States of America,… Read more »

ET69
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ET69

Marx was right about capitalism . Capital gets more and more concentrated in fewer and fewer hands. There is no way out of this greed. We need socialism!

Linda Gordon
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Linda Gordon

5g is a kill grid. The depployment of this weapon is an act of terroism genocide and ecocide. The marketers need to be jailed as terrorists.

Bob Frankston
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The real issue with 5G is that it’s an attempt to roll back the Internet and return to the telecom of the 1970s when the phone company controlled all.