Gov. to pay back billions in unclaimed WWII bonds?

WWII bonds: Have you cashed yours yet?

In 1940, America's armed forces were nowhere near the size they are today. In fact, they weren't even among the 12 biggest or most formidable in the world. However, with the threat of war on the horizon, President Roosevelt said the US would need 50,000 planes in the next four years. Everyone thought he was crazy and it was an impossible feat, especially considering the country had nowhere near that sort of money after the depression of the 1920s.

They ended up producing 100,000.

How? War bonds.

Citizens nationwide were asked to buy war bonds, which generated capital for the government in order to finance the war effort. The American war bond drives were famously incredibly successful especially with propaganda images such as the raising of the Stars and Stripes on Iwo Jima and celebrities, politicians and cartoon characters urging the population to do their patriotic duty.

However, such patriotism may be coming back to bite America in its proverbial behind. Today, it was announced that the federal government is facing a lawsuit over billions in unclaimed bonds which has led to a financial showdown between the Treasury Department and various states who claim ownership.

Now with the economic recession putting millions out of work, two ongoing conflicts in the Middle East, a proposed heath care reform and with stimulus packages being needed in every market in the country, that money couldn't be more appealing.

It is claimed that the unclaimed bonds total a staggering $16 billion, thanks mainly to a 40 year maturity and the fact that many were lost, forgotten about or never cashed in. As a result, the State Attorney General is suing the Treasury Department saying the federal government never made any effort to find those people. Instead, they want the money given to the states, who have a legal system in place for finding the owners of unclaimed funds.

"It's better for the millions of American who are the rightful owners to have it returned to the states, because the states will make a real effort to find them," said David Bishop, a partner at Kirby McInerney who is representing the states in the suit.

"And if after searching for them they can't find them, the money can go to work in the communities where the bonds were purchased," he said, speaking to the AP.

In response, the Treasury Department has said that it has tried to find owners of the unclaimed bonds, and that they even have a Web site where people cam simply type in their Social Security number to see if they have one. They also point out that the money is not just laying around somewhere.

"One of the misunderstandings out there is that there is a lot of cash sitting somewhere in a drawer. Money from savings bonds was used to run the daily operating expenses of the government," said Joyce Harris, with the Bureau of the Public Debt. "These are obligations of the federal government, not the states. There is no pot of gold out there just waiting for someone to grab it."

Harris also stated that most of the unclaimed bonds are far more recent than the original World War II era bonds and that overall, 99 percent of people claim their bonds. Those that don't, often do it for tax reasons or out of a sense of patriotism.

What is clear is that no-one has ever said they couldn't do with $16 billion, so the case is expected to go to court with attorneys for the federal government arguing the states don't have any say on what is a contract issue between the original purchasers and the Treasury Department.

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