The Treasury Department paid Comerica Inc. tens of millions of dollars for a government payment card that left poor and disabled Americans vulnerable to fraud and shoddy customer service, a new inspector general report says.
Trying to save money, Treasury officials pressured vulnerable citizens to use the Direct Express cards. Comerica issued the cards under a contract that was supposed to be cost-free for the government and relatively cheap for consumers. Officials spent years promoting the card at road shows around the country.
Yet the department did not properly oversee the program, Treasury’s inspector general concluded in the report to be released today. Officials ignored available data about fees charged to customers and call center wait times, and based many decisions on unverified information from Comerica, according to a report due out Friday by Treasury’s inspector general.
Taxpayers ended up paying the bank $32.5 million through March 2013 under an amended deal that officials offered without requiring any evidence that Comerica needed the money or would use it for this program, the report says. The payments turned a potential loss of $24.2 million into $8.4 million of profit for Comerica, it says.
Comerica never formally requested additional payments from Treasury, the report says.
A Treasury official justified the unexpected payments by saying the Department “did not want Comerica to fail for providing the government a service,” the report says. It notes that Comerica had $65.2 billion in assets and equity of $7.2 billion as of December.
The audit broadly criticizes the bureau’s record-keeping, noting that “documentation supporting key decisions and the ongoing monitoring of a program involving tens of millions of taxpayer dollars and the delivery of payments to millions of Federal beneficiaries was often lacking.”
The Direct Express card was created as an alternative to paper checks that Treasury has phased out in an effort to cut costs.