By Ray Birch
WASHINGTON—Credit unions are preparing to support members through what appears to be an imminent government shutdown. But this round may prove more challenging for both members and credit unions as new details emerge from Washington.
According to POLITICO, the White House budget office has directed federal agencies to prepare reduction-in-force plans that would permanently cut employees working in programs not legally required to continue. The Office of Management and Budget memo, shared with the outlet ahead of its release to agencies, significantly raises the stakes of a possible closure.
America’s Credit Unions, in a letter to its members Thursday, outlined what’s at stake.
“This year’s potential shutdown could bring significant and more permanent impact, with an increased risk that federal workers will lose their jobs. The Office of Management and Budget (OMB) has instructed federal agencies to prepare reduction in force (RIF) plans for large layoffs during the possible 2025 government shutdown, specifically for programs that are not legally required to continue. This would result in permanent job losses. OMB has confirmed that the reduction in force will not take place should Congress successfully pass a clean short term funding bill by Sept. 30, 2025.”
"Yes, we are very concerned for our members who may be a part of the Reduction in Force,” Damita Robinson, COO at $2.45-billion Andrews FCU in Suitland, Md., told CUToday.info. “Our advice would be for any impacted member to contact our financial counseling partner, Greenpath Financial Counseling, who can help them map out options based on their individual situation."
Growing Concerns
Robinson agreed there is growing concern that a shutdown may occur next week, and if it happens, Andrews FCU is prepared to assist its members.
“In the event of a government shutdown, we’re offering loans up to $5,000, penalty-free withdrawals from share certificates, and flexible options like skipping a loan payment, extending repayment terms, or modifying existing loans. For members with mortgages, we also have assistance programs such as forbearance plans to provide relief,” she said.
Robinson emphasized these steps are about more than short-term fixes.
“They’re designed to ease stress, protect credit, and give families the flexibility they need until paychecks resume,” she explained. “We understand the unique challenges facing our members, especially military families and federal employees, and we want them to know we are here to stand with them. This is exactly why credit unions exist. Unlike banks, we don’t pay federal income taxes because our cooperative, not-for-profit structure allows us to return those resources directly to members—whether that’s through lower loan rates, better savings returns, or emergency relief programs like these.”
The $1.5-billion Frontwave CU in Oceanside, Calif., acknowledged the weeks ahead could prove more challenging if an RIF accompanies the shutdown.
“Each time (a shutdown) occurs, it is stressful, for the country, for the government workforce, and for our members,” said Frontwave Chief Experience Officer Todd Kern. “A government shutdown doesn’t just affect the government, it affects the lives and wallets of the hard-working men and women that serve our community and country. We’ll see how this progresses in Washington, but an impending OMB reduction in force is concerning and should have any credit union who supports the government workforce on alert. We will continue to be 100% committed to fight for our members every day. Especially through these uncertain times.”
Uncertainty Ahead
Kern said Frontwave is ready for whatever happens next week.
“Each time the federal government threatens to shut down, we provide assurance to our federal government employee members – most notably our Marine members – that Frontwave will post federal government payroll, based on the most recent payroll received. This typically amounts to $70 million in loans for our members,” he explained. “This commitment guarantees that our members will have access to their funds should the federal government fail to provide them with the on-time pay they earned. Even if there is no federal agreement on the budget.”
Additionally the CU offers financial assistance loans, loan extensions, skip-a-payment options on qualified loans, on-site certified financial counselors, and financial education programs through Greenpath.
At $8.3-billion Members 1st FCU in Enola, Pa., CEO Mike Wilson stressed his credit union is committed to supporting members during times of uncertainty.
“We offer a range of financial solutions, including payment-deferred personal loans for six months when cash is needed, as well as a flexible no-fee skip-a-pay option to defer existing loan payments with the credit union,” Wilson said. “Either of these two programs are designed to ease financial burdens during challenging periods for our members and not drive interest or fee income.”
Wilson added that Members 1st understands that every member’s situation is unique.
“That’s why our team is dedicated to providing personalized support and guidance to help our members navigate life’s financial challenges with confidence,” he said. “This is a great example of how credit unions, time and time again, do the right thing in finding ways to help their member-owners, especially in uncertain times when people need support.”
Jason Stverak
No Signs Of Compromise
As CUToday.info reported, the Senate last Friday rejected competing short-term funding measures, leaving Washington without a path to avoid a government shutdown when the fiscal year ends at midnight Sept. 30, with neither party showing signs of compromise.
Jason Stverak, Chief Advocacy Officer of the Defense Credit Union Council, reassured credit union stakeholders the NCUA will not be impacted by a potential federal government shutdown due to its independent funding.
“NCUA does not rely on taxpayer dollars or annual congressional appropriations for its operations,” he explained. “Instead, it operates on a self-funded model: its operating budget is financed by operating fees paid by federal credit unions and earnings from the National Credit Union Share Insurance Fund. In other words, credit unions themselves fund their regulator through dues and the deposit insurance system, rather than through the federal budgeting process.
“This structure was intentionally designed to keep the NCUA independent and free from the uncertainties of politics and government funding cycles. As a result, a lapse in federal funding has no direct effect on the NCUA’s ability to carry out its mission,” Stverak said.
Stverak added that he believes NCUA’s independent funding structure could shield it from any reduction-in-force directive issued by OMB. He cautioned, however, that only the agency itself can confirm whether it would be subject to such plans.
NCUA Quiet
CUToday.info reached out to NCUA Thursday asking if the agency is shielded from complying with the RIF due to its independent funding. The agency did not respond by press time.
In the event of a shutdown, and possible a reduction in force order, America’s Credit Unions said it has created new resources for credit unions (click here). In its letter to members Thursday, ACU noted that in 2018–2019, 800,000 federal workers were affected from a government shutdown.
“That’s 800,000 families trying to figure out where to find the money to pay their next mortgage payment and grocery bills. The Government Employee Fair Treatment Act of 2019 (31 U.S.C. 1341(c)(2)) established that both furloughed employees and employees who were required to perform work during the shutdown will receive retroactive pay for those work periods at the standard rate of pay at the earliest date possible after the shutdown ends,” ACU stated.
ACU, in its letter, pointed out that during the 2018-2019 shutdown, more than 500 credit unions quickly stepped in and offered individualized support programs for those affected by the 35-day government closing.
“More than 60,000 members of these credit unions turned to their credit union for support. Credit unions provided over $46 million in low- or no-interest loans. Additionally, more than 11,000 credit union members were afforded loan extensions and other modifications, often with associated fees waived. Also, over 3,000 eligible people joined a credit union to help them weather the shutdown’s financial uncertainty,” ACU stated.