U.S. Rep. Maxine Waters and other federal regulators report arrangements with borrowers benefit all parties in the long run.
As the partial government shutdown—now the longest in modern U.S. history—continues, federal regulators issued an advisory to financial institutions to work with borrowers who may face temporary difficulties making loan payments.
“While the effects of the federal government shutdown on individuals should be temporary, affected borrowers may face a temporary hardship in making payments on debts such as mortgages, student loans, car loans, business loans, or credit cards,” according to a news release from the Consumer Financial Protection Bureau. “As they have in prior shutdowns, the agencies encourage financial institutions to consider prudent efforts to modify terms on existing loans or extend new credit to help affected borrowers.”
In conjunction with the CFPB, the Board of Governors of the Federal Reserve System, Conference of State Bank Supervisors, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA) and the Office of the Comptroller of the Currency (OCC) issued the advisory.
On Jan. 10, House Financial Services Chairwoman Maxine Waters, D-Calif., issued a letter to the Federal Reserve, CFPB, FDIC, OCC and NCUA, urging them to work with consumers on credit obligations during the shutdown.
“In the letter, Chairwoman Waters requested immediate actions by the regulators to, at the very least, reaffirm a joint statement the agencies issued in 2013 to provide guidance to their regulated financial institutions to ensure the over 800,000 federal employees and others affected by the Trump shutdown are not punished as a result of a temporary period of financial stress,” according to a news release from the committee.
The advisory from regulators states, “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. Consumers affected by the government shutdown are encouraged to contact their lenders immediately should they encounter financial strain.”
Regulatory agencies with oversight of the accounts receivable management industry, including the Federal Communications Commission and Federal Trade Commission, continue to halt operations as a result of the lapse in funding from the shutdown.
The FTC closed Dec. 28 due to the lapse in government funding. The FCC also released details on the impact of the partial lapse in government funding.
FCC Chairman Ajit Pai and Commissioners Michael O’Rielly, Brendan Carr and Jessica Rosenworcel will work through the shutdown, in addition to some employees designated to “protect life and property” and assist with disaster operations. In addition, the Office of the Inspector General will continue operations until further notice. The FCC will provide an update on its website when all operations are restored.
The FTC reports all commission events are postponed until further notice, while some online services remain available.
The partial government shutdown primarily impacted agencies with federal employees that rely on federal funding, such as the U.S. Department of Commerce and U.S. Department of Health and Human Services.
Meanwhile, on Jan. 11, the House of Representatives approved a bill that would provide back pay to federal workers impacted by the shutdown, The Hill reports. The U.S. Senate also unanimously supported the bill and President Donald Trump said he would sign it as well.
President Trump said he would not approve legislation to open the government without $5.7 billion in funding for the proposed border wall, according to the article.
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