As many employees prepare to miss their first paycheck as a result of the Federal Government shutdown, Congresswoman Maxine Waters (D-CA)
, Ranking Member of the House Financial Services Committee, lauded the action of five federal financial services agencies that today called on financial institutions to work with customers that have been affected.
In a letter to the heads of the Federal Reserve, Federal Deposit Insurance Corporation, Consumer Financial Protection Bureau, Comptroller of the Currency and National Credit Union Administration, Congresswoman Waters expressed her appreciation for agencies’ efforts to encourage financial institutions to respond to the needs of customers who may be experiencing financial hardship as a result of the shutdown.
The letter reads: “With hundreds of thousands of people affected by the shutdown, many individuals and their families are now uncertain whether they will be able to pay all their bills in full and on-time. I therefore agree with your agencies that it is extremely important that financial institutions adopt flexible policies for their customers that take into account the financial strain that they may be experiencing because of a temporary, delayed or permanent loss in compensation due to the shutdown.”
This Friday, October 11 marks the first paycheck many affected employees will miss as a result of the shutdown.
Full text of the letter is below:
The Honorable Ben S. Bernanke, Chairman The Honorable Thomas J. Curry
Board of Governors Comptroller of the Currency
Federal Reserve System Office of the Comptroller of the Currency
Constitution Avenue & 20th Street, NW Independence Square, 250 E Street, SW
Washington, DC 20551 Washington, DC 20219
The Honorable Martin J. Gruenberg The Honorable Debbie Matz
Federal Deposit Insurance Corporation National Credit Union Administration
550 17th Street, NW 1775 Duke Street
Washington, DC 20429 Alexandria, VA 22314-3428
The Honorable Richard Cordray
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, DC 20552
Dear Chairman Bernanke, Comptroller Curry, Chairman Gruenberg, Chairman Matz, and Director Cordray:
I appreciate the initial steps that your agencies are taking to encourage financial institutions to be responsive to the needs of their customers who may be experiencing financial hardship as a result of the shutdown of the Federal Government that occurred on October 1, 2013. With hundreds of thousands of people affected by the shutdown, many individuals and their families are now uncertain whether they will be able to pay all their bills in full and on-time. I therefore agree with your agencies that it is extremely important that financial institutions adopt flexible policies for their customers that take into account the financial strain that they may be experiencing because of a temporary, delayed or permanent loss in compensation due to the shutdown.
It remains uncertain when the Federal Government will resume normal operations, and whether and when employees will be paid. Therefore I urge your agencies to notify regulated institutions that prudent efforts to assist their customers affected by the shutdown will not later be criticized by examiners as long as they are consistent with current safety and soundness guidance. We hope that explicit regulatory guidance to institutions on this matter will encourage them to consider adjusting or altering terms on existing loans or credit obligations held by affected customers. This is important to ensure customers are able to meet loan payments and avoid high fees and penalty payments that might otherwise be incurred.
Underlying the hope that institutions will decide to work with their customers during this difficult time is my concern that this unique and, hopefully, short-term economic situation may still have long-term credit consequences for affected employees. Through no fault of their own, some affected employees may be unable to pay all of their bills on-time because of the shutdown. Once negative information is reported to consumer reporting agencies, affected employees are likely to see a reduction in their credit scores. This may limit their ability to access credit or result in their being offered higher rates and more costly terms on credit in the future.
I appreciate your agencies’ efforts to minimize the impact of the shutdown on institutions and their customers, which I believe is consistent with promoting financial stability. It is in no one’s interest to punish affected employees who may be enduring this temporary period of financial stress.