States Suing to Grab Unclaimed War Bonds
October 19, 2009
World War II was funded by a combination of tax increases, inflation, and borrowing, with much of the borrowing through War Bonds. Basically, you lend the federal government money and it pays it back to you, with interest, over 40 years. Lots of patriotic Americans signed up, but some $16 billion of the bonds went unclaimed by the time the last ones were redeemed.
So, yes, lawsuit. But by someone you wouldn’t expect:
The state attorneys general suing the Treasury Department charge that the federal government made no effort to find those people. They want the money given to the states, who have a legal system in place for finding the owners of unclaimed funds.[…]
The Treasury Department counters that it indeed tries to find owners of the unclaimed bonds, and says it has a Web site where people cam simply type in their Social Security number to see if they have one. And it points out that the money is not just laying around somewhere.[…]
The complaint was first filed in Federal court in New Jersey in 2004 with New Jersey and North Carolina as the plaintiffs. Montana, Kentucky, Oklahoma and Missouri later joined the case. All states would benefit if the lawsuit is successful.
The case will come down to constitutional arguments. Attorneys for the federal government are arguing the states don’t have standing on what they see as a contract issue between the original purchasers and the Treasury Department.
Yeah, right, I’m sure the states will put the money in escrow while they search for the owners. This just about what level of government gets to keep unearned gains.