Workers Who Help Process Obama's Paycheck Face Termination

March 24, 2010 — -- Employees at a government agency in Cleveland which processes President Barack Obama's paycheck risk losing their jobs because they have failed credit report checks, according to Troy Marshall, a union leader at the Cleveland office of Defense Finance and Accounting Service (DFAS).

He says tighter security clearance rules introduced by the Pentagon five years ago have cost 25 DFAS Cleveland workers their jobs and threaten another 42. The rules are unfair, he says, because these employees don't handle classified information and are struggling to dig out of debt due to the economic crisis.

Tough Economy to Blame

"We've had people who have tried to get their debt consolidated […] but in this economy you can't get loans," says Marshall, who also works as a management assistant at DFAS and who claims he was suspended after 17 years because of $6,000 he owes on credit card and hospital bills.

Marshall says he has diabetes and heart disease; his wife has leukemia. "Cleveland is a very depressed area, it's not like you can get another job," he says.

Tom LaRock, a DFAS spokesman, said he could not immediately comment on particular employees. But he confirmed that DFAS Cleveland processes Obama's paycheck and that DFAS staff must have their credit checked as part of a wider background screening they must pass in order to stay employed.

The Department of Defense, which oversees DFAS, has conducted background checks for decades, but it was only in 2005 that DFAS' entire staff fell into the "sensitive" clearance category and became subject to comprehensive background checks.

"All DFAS positions are considered sensitive because our employees have access to privacy act information such as names, social security numbers and bank account numbers," says LaRock, explaining that DFAS' main task is to pay military personnel and contractors. Everyone at DFAS, including himself, submits to a background check that covers everything from U.S. allegiance to drug use. "The credit check is just a portion of it."

Marshall, however, argues that DFAS is making decisions based simply on the credit score. He says workers who failed the credit portion began receiving termination letters in 2007, and since then, 25 have been either fired or forced into early retirement. Another 20 have been suspended, and the rest are waiting for their fate to be decided, he says.

The White House would not comment.

Lawmakers Angry

Rep. Dennis Kucinich, D-Ohio, slammed DFAS' reported actions and says he will call for Congressional hearings to investigate.

"This thing is nonsense because you can't punish people for having bad credit," he told ABC News.com. "DFAS is being very tough on their humble employees while at the same time the people on Wall Street who committed financial misdeeds […] are getting bonuses."

Rep. Marcia Fudge, D-Ohio, says she has written to DFAS' Washington-based director, Teresa McKay, demanding answers.

A New Trend

"Clearly we want to make sure that people who work in sensitive positions have clearances, but to say that someone is a risk to national security solely because of their credit is a stretch," she told ABC News.com.

Like Fudge, Marshall says he's not opposed to credit checks in principal, but says he believes the government should take an employees' performance and work history into account instead of relying just on a credit score. He points out that all his performance reviews were marked "exceptional" or "highly satisfactory."

Credit scores, which have dropped for many Americans since the start of the economic crisis two years ago, have been causing a lot of trouble recently.

As credit markets have clamped up, consumers with poor credit who would have once easily qualified for new loans are finding it difficult to keep up with their bills. Many have been forced into foreclosure or bankruptcy, especially if they also lost income after falling ill or losing a job.

In addition, homeowners are discovering to their dismay that enrolling in the government's loan modification program can cost them up to 100 points of their credit score.

Despite these pressures, and admissions by some employers that their workers have little control over their credit score during a recession, employee credit checks are becoming more popular. Private companies, for example, are increasingly looking into candidates' credit histories, trying to gain insights into their character.

Karen Terry, a customer service representative at DFAS who was suspended last summer, says she doesn't understand why the agency won't help her pay off her debt instead of threatening her with termination.

"We want the same privileges they give enlisted military members: let us set up an allotment and take it out of our paycheck to pay our debt," says Terry, a mother of four. She claims the Pentagon told her she was suspended after discovering a $6500 debt and a history of missed tax payments. "We're trying to deal with every day challenges, to keep a roof over our head and put food on the table."