There is no shortage of headlines about the partial government shutdown that is now on its 27th day, and no shortage of articles speculating how long it will go on, what will be affected and (most often) what it will take to finally bring it to an end. There is, yet, one simple takeaway from all of them: So far, there is no end in sight.
While that can — and hopefully will — change any day now, the reality is that the longer the government remains partially closed for business, the longer 800,000 federal workers hit by the shutdown will not be receiving paychecks. As of last week, most officially missed their first payday, and dozens of federal workers who spoke to The New York Times noted they are already feeling massive effects.
“I have child support and rent, and I’ve told my landlord that any increase and I will have to move,” electronics technician Joseph Gudge told The Times.
However, as stories of workers’ difficulties during the shutdown have become prevalent, so has another category of story — and one not seen nearly as often: how credit unions are stepping in to help federal workers during this mounting cash flow crisis.
Dean Young, chief experience officer at PSCU, told PYMNTS that credit unions nationwide have been busy.
“There are a lot of lives that have been impacted, and a lot of pain to go around. The work that credit unions are doing has really enforced their places in society, and how they serve the membership, especially in times of need. We are seeing tons of activity both proactive and reactive,” he said.
The Range Of Reactions
What credit unions are doing nationwide varies.
The Navy Federal Credit Union is offering loans of up to $6,000 to eligible members, with no fees or interest charges. Congressional Federal Credit Union will extend a line of credit with a 0 percent interest rate for 60 days. In North Dakota, NorthStar Credit Union is deferring loan payments for effected federal workers, while a Brevard County Florida credit union is offering a specialized stop-gap loan for federal workers to make sure they can keep paying their bills on time. Credit unions all over the state of Michigan are offering special relief services for workers who aren’t being paid, and partnering with local utilities to create deferred payments without penalty programs.
“Consumer Credit Union out in Illinois — we talk so much about data and analytics, what does it really mean? This credit union went in and, thanks to investments [it’s] been making over the last few years, [has] been able to quickly spin up targeted campaigns to those impacted at their credit union, to offer up various types of assistance during this time of need,” Young said.
Yet, while the approaches to aid vary and overlap, they’ve been extremely immediate and quite specific, particularly when compared to the response offered by the big banks. Chase, Wells Fargo, Citi and Bank of America, thus far, have not announced similarly widespread and targeted program offerings for the affected — though they have confirmed they are waiving interest charges and fees for affected workers on a case-by-case basis.
“These credit unions aren’t Bank of America, [and] they aren’t Wells, etc. That is what makes this so awesome; what is driving them is not the financial benefit. It is the people, it is their employees, it is how they serve their membership. They have flexibility because they don’t answer to their shareholders and things of that nature. They are cooperative and owned by their members. When situations like this happen, they can make really good decisions based on how they serve their membership,” Young explained.
Credit unions, of course, have to make money, Young noted — as any business does. They can’t go on not collecting loan payments, or extending credit to people who aren’t getting paid indefinitely. The shutdown must come to an end. From the point of view of credit unions everywhere, they would like to see it come to an end yesterday.
However, credit unions are well-capitalized nonprofits — and they are more driven by serving their membership than feeding the bottom line. That means they aren’t excited about the prospect of a protracted shutdown, he said, but they are prepared to stick it out with their members until the end.
Digitally Limiting The Disruption
There is no good time for a shutdown, Young noted, and no way on earth to define missing a paycheck as a good thing for any worker. There is really no bright side to either.
Yet, in the midst of digital banking and the various touchpoints it creates between credit unions and their members, it does make a massively disruptive event — like the loss of a paycheck — something that credit unions can work on more directly and seamlessly with their members to mitigate.
“The very fact that we are progressing in the digital age does help. It creates the ability to proliferate the channels, and leverage them to reach out and let members know you are here to help. At the end of the day, it’s not easy for anyone, regardless of digital or traditional channel, but it helps,” he said.
While credit unions can — and have — lobbied Washington officials to get the government open again (often alongside the big banks), the reality is that no one is sure when this is going to end. That means, according to Young, for the immediate future, the best thing credit unions can do for their members is help — and make sure that a disruptive event in their financial lives doesn’t spiral out into a destructive one.