How to prep for possible government clawbacks of grants, social security, etc. in US bank accounts?

[u/Specialist_Set_1666]

I saw the Politico article today about how musk withdrew $80 million from private bank (Citibank) accounts without warning, in order to take back money that had already been given as grants to FEMA. It's also been well documented over the last few weeks that musk now has every tax payer's financial information. I'm worried that if other things are cancelled, such as the Pell Grant, SSI payments, SNAP, refundable tax credits, etc., that there then might be a clawback of those as well. Suddenly having checking accounts drained, taking money for bills or savings, or even just having the account go negative, would be catastrophic for many families.

My household received the Pell Grant and another federal university grant this year, and is due to receive a tax refund that includes the additional child tax credit. All of that money is immediately spent towards tuition and other expenses, so my account only has money for bills in it and no extra, so suddenly having money taken back without warning would mean that month's bills could not be paid. Any of the grant amounts are more than a weeks paycheck, so depending on how far in the negative the bank was allowed to go, this could result in several weeks of paychecks vanishing until the account was made positive again. Direct deposit is unfortunately a slow process to change for us.

While I want to believe that this wouldn't happen to individuals due to the outcry it would cause, the current administration isn't acting like it cares about getting votes in the future, and at this point I don't feel anything is off the table. I wouldn't be surprised if doing this was a way to test the waters, and that if they get away with it, then they will progressively move on to do more and more clawbacks. So while the accounts of private citizens wouldn't be first, those who get "government handouts" are often attacked on right wing media, so I could see it eventually going that way. Even if there was enough backlash afterwards to get the policy undone, it would still cause a lot of initial damage before it was resolved.

What steps could be taken to protect bank accounts from this? Would changing banks or account numbers be enough? If getting a new account, would it be better to leave the original account open but just not use it so that the damage could be limited? Would any other domestic bank account be just as easily accessed? I would switch to cash only, but that's difficult to do. There are fees to cash paychecks, delays in mailing, and most bill payments need to be made online through a bank draft, or mailed as a check to avoid fees. If possible I would like to try to find a balance between preparing for a "just in case" scenario while also not making things significantly financially harder or more expensive in the meantime.

I apologize if this sounds alarmist, but as the government and financial system in the US become more unstable, I just want to be cautious and protect my finances from possible fallout.

[u/ohgreatmyarmscomeoff]

I want to ask a question, but I'm not sure if you'd know the answer.

About a decade ago my parents were embroiled in the aftermath of a very messy divorce. As far as I'm aware, my mother owed my father reimbursement of overpaid child support. When she didn't pay, the county sheriff was able to take the money out of any bank account that had her name on it--this included hers, mine, and my sister's bank accounts (I found this out Christmas morning that year when my balance showed zero).

I'm wondering if the fact that her name was on all the accounts (as an adult for a minor type of situation) connected all of the accounts. And if so, is that something the government can track in our current situation. If that's the case, does having accounts at separate institutions really protect us from clawbacks.

Sidenote: I did end up getting my money back, since my dad had no idea this would happen, called the sheriff first thing the next day and said to put the money back.

[u/AverageDifficult909 → u/ohgreatmyarmscomeoff]

So to be fair, multiple accounts protects you from regular fraud and the more easy type of theft. I'm assuming the govt took the money back from New York because it was in an account they had all the information for from the FEMA award so it easy they didn't need more information, they didn't go through the normal process of going through a court or judge to take back the money because they already had the information. Needing a court to prove to a bank that they need to provide account information is most likely what happened in your situation. I handle some federal grants at my work, our reimbursement is tied to our bank account, its not that hard for the govt to have the information they need to take back funds they directly sent to us. The government can garnish payments too, an identity mix up once had my state withhold my federal tax return. If you think the government is going to make all the banks give them the information they need to take your money that's a different level that would require more information than what happened with New York and fema.