As Friday (Jan. 11) came and went and government workers affected by the 21-day shutdown didn’t receive paychecks, U.S. banking regulators asked lenders to help workers who couldn’t pay their bills or needed credit in the meantime, according to a report from Reuters.
“The agencies encourage financial institutions to consider prudent efforts to modify terms on existing loans or extend new credit to help affected borrowers,” the U.S. Federal Reserve said in a statement. The Fed added that efforts by banks to help wouldn’t be criticized by bank examiners.
“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,” the central bank said.
Federal workers not receiving paychecks run the gamut from IRS workers to Secret Service agents, and number about 800,000. Some have turned to social media for help, using online fundraising sites or even selling possessions.
The statement was issued by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the National Credit Union Administration and the Conference of State Bank Supervisors. The letter urged affected workers to contact lenders and attempt to discuss arrangements.
On Thursday (Jan. 10) at a luncheon in Washington, D.C., Federal Reserve Chairman Jay Powell discussed the effects that a long-term shutdown could have on the economy. Previous shutdowns were short and didn’t affect the economy too much, he said, but the current lockdown is entering into new territory as it continues its stalemate.
“A longer shutdown is something we haven’t had,” he said. “If we had an extended shutdown, then I do think that would show up in the data pretty clearly.”
Powell stressed that the Fed is watching “patiently and carefully” while it keeps an eye on how things will turn out.