WASHINGTON–Thousands of furloughed federal workers have applied for help from credit unions, banks, mortgage lenders and other sources after missing their first paychecks on Friday, Jan. 11. More federal employees who are going unpaid as a result of the partial federal shutdown will miss their first paychecks on the 15th, including members of the U.S. Coast Guard.
The partial federal shutdown is now the longest on record, with no sign the impasse between President Trump and Congress over the border wall will be resolved anytime soon.
Navy Federal Credit Union in Vienna, Va. reported it has enrolled 11,000 members in a program that offers a 0% loan on amounts up to $6,000 and made deposits into the accounts of more than 1,000 members who missed their checks last week, the credit union told the Wall Street Journal. Navy Federal said it expects to make deposits into the accounts of approximately 9,500 members today.
CUToday.info has compiled a list of more than 75 credit unions here that are now offering some form of relief.
A number of credit unions in the Seattle/Tacoma market participated in a benefits fair hosted by the Port of Seattle at the Seattle Tacoma-International Airport that also included other organizations offering support. The shutdown has meant employees of the FAA and TSA are not being paid.
Analysts are cautioning that as the shutdown drags on even more people beyond the 800,000 federal workers affected are going to start feeling the pinch, including private contractors who are not eligible to receive any sort of missing pay once the shutdown is resolved.
Other Developments
In other news related to the shutdown:
- Democrats in Congress last week introduced legislation that would give relief to furloughed federal workers who are unable to pay rent or repay loans as a result of shutdown, which began Dec. 21, 2018. The Federal Employee Civil Relief Act, introduced by Sen. Brian Schatz (D-HI) and Rep. Derek Kilmer (D-WA)would prohibit landlords and creditors from taking action against federal workers or contractors who are hurt by the shutdown and cannot pay rent or repay loans. It would also allow federal workers to sue creditors or landlords that violate those protections, which would remain in effect during and for 30 days after a shutdown. The bill is modeled after the Servicemembers Relief Act of 1940.
- The National Association of the Self-Employed issued a statement saying many small businesses are also starting to feel the impact of the shutdown, ranging from the inability to receive small business loans (the SBA is shuttered) to tax uncertainties. “The negative consequences of one of the longest shutdowns in U.S. history is now fully impacting our country’s small business community,” said Keith Hall, president and CEO of the National Association of the Self-Employed. “From uncertainty around how the shutdown could impact delays in tax refunds small businesses were looking to invest from this year’s new tax law to the shuttering of the Small Business Administration impacting small business loans, America’s small businesses are on the front-lines feeling the adverse impact.”
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NCUA joined with the Fed, Conference of State Bank Supervisors, CFPB, FDIC, and Office of the Comptroller of the Currency in issuing a statement calling on federal and state regulators to encourage financial institutions to work with consumers affected by the federal government shutdown. “…The agencies encourage financial institutions to consider prudent efforts to modify terms on existing loans or extend new credit to help affected borrowers,” the agencies said in a statement.
“Prudent workout arrangements that are consistent with safe-and-sound lending practices are generally in the long-term best interest of the financial institution, the borrower, and the economy. Such efforts should not be subject to examiner criticism.” - What’s uncertain is just how many people who have been working on federal contracts are now missing paychecks. The Wall Street Journal noted their numbers span numerous industries, ranging from prep cook to dairy farm appraiser to radar operator. “You are talking about a big slice of the work force,” Paul Light, a professor at New York University who studies federal workers, told the Journal. “I can’t imagine a worse time to have a shutdown, as some think we are headed toward a recession.” Light estimates there are 4.1 million federal contractors and grant recipients, not all of whom have been affected by the shutdown, the Journal said.
In 2017, according to Light, the federal government paid out an estimated $465 billion in contracts, and that amount is expected to have grown last year with increases in military spending.