U.S. sitting on $17 billion in unclaimed war bonds

By David Cho
Washington Post Staff Writer
Saturday, November 28, 2009

The seemingly endless stacks of filing cabinets inside a West Virginia warehouse could hold the answer to an unsolved mystery: Who owns nearly $17 billion in lost government bonds?

The unclaimed treasure represents the amount of U.S. bonds that have matured but not been redeemed. Many of these outstanding bonds date to World War II, but over the years the certificates were forgotten in cellars, lost in fires or tossed out in the trash. Unless they are found, the U.S. government can keep the loans, interest free.

In the wake of publicity surrounding a lawsuit on the missing bonds earlier this fall, the government has been deluged with requests from people wondering whether they are entitled to repayment.

However, matching the claimants to the missing bonds won't be easy. The Treasury Department has just 10 to 12 people assigned to investigate claims amid the millions of files stored in a federal facility off the shores of the Ohio River in Parkersburg, W. Va. Their job is a little like searching for the box holding the Ark of the Covenant, as depicted in the Indiana Jones movies, among the countless anonymous crates stacked in the government warehouse.

Digitizing the files would help but would cost "several tens of millions" of dollars, officials said. That would eat up a large chunk of the $187 million budget of the Bureau of the Public Debt, a small division of Treasury that oversees its bond programs. The bureau's Web site, http://www.treasurydirect.gov, provides a limited search function called Treasury Hunt. But the searches only cover bonds sold after 1974; most of the lost certificates were issued before then.

A group of state officials claim that Treasury's efforts have fallen short and have filed a lawsuit in U.S. District Court in New Jersey to take over the hunt for the bondholders. The states contend they are better equipped for the search -- and have laws that grant them the authority to take for themselves unclaimed proceeds from the bonds.

The state officials calculate that California and New York could get as much as $1.6 billion. Virginia and Maryland stand to reap more than $300 million each and the District could get as much as $81 million. The states that have joined the lawsuit so far are Kentucky, Missouri, Montana, New Jersey, North Carolina and Oklahoma. Treasury has decided to fight the case to keep the states out of its pockets.

The savings bonds were first sold during World War II as government officials urged citizens to help finance the war effort. President Franklin D. Roosevelt bought the first war bond and called on patriotic Americans to join "one great partnership." Celebrities were recruited for sales pitches. Treasury even produced radio musicals to urge listeners to open their wallets.

The paperwork for the bond sales was massive. In 1941, 15.5 million were issued. The next year it grew to 147 million.

Each bond came with an identification stub that was detached from the certificate. The stubs were delivered in massive piles to the Bureau of Public Debt. Over the years they have been recorded on microfilm and stored at the warehouse in West Virginia.

Treasury officials say that most of the bonds were redeemed. But as the decades passed, $16.7 billion of the bonds -- less than 1 percent of the total amount issued -- matured but apparently were forgotten or lost by their holders. Another $143 million in other types of government securities have similarly gone unredeemed. These bonds are now losing value, given the rate of inflation. And they no longer pay out interest.

Occasionally someone will call the bureau with nothing more than the name of a relative and ask officials to investigate whether that person is among the holders of unredeemed bonds. With such scant resources and millions of files to sift through, a bureau official said such requests are unlikely to be fulfilled.

People who write or call to redeem a bond have to prove they are the rightful owner by providing the complete name and address that was written on the original bond certificate and the approximate date it was purchased, the official said.

"The United States Supreme Court has held that the savings bond is a contract between the United States and the registered owner of the bond, and the United States has a perpetual obligation to pay the owner and to honor claims," Mckayla Braden, a senior adviser at the bureau, said in a statement. "The Bureau of the Public Debt stands ready to assist all citizens who have invested in U.S. Savings Bonds."

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