Here are the actual shutdown loans on offer that Wilbur Ross referred to
Commerce Secretary Wilbur Ross has drawn flak for saying unpaid federal workers can get loans — after he was asked about furloughed employees going to shelters for food during the ongoing partial government shutdown.
The commerce secretary was blasted by House Speaker Nancy Pelosi and others for sounding heartless, but his statement that a number of banks and credit unions are offering loans for federal employees affected by the shutdown was at least not factually wrong.
Hundreds of credit unions across the country that serve government employees are, in fact, providing zero- or low-interest loans or other assistance to workers going without pay during the shutdown, encouraged by the fact that these employees are set to get back-pay as soon as agencies reopen.
“There’s at least 500 that we’ve been able to keep tally of so far,” said Lauren Williams, a spokeswoman for the Credit Union National Association, referring to the number of U.S. credit unions with offers sparked by the shutdown. The CUNA, a trade association that lobbies for credit unions, is running a website that tracks the shutdown-related moves by such institutions in all 50 states.
Offers include the Navy Federal Credit Union’s decision to lend up to $6,000 to eligible members, saying there will be no fees or interest charges. And Pentagon Federal Credit Union is offering loans with a 0% annual percentage rate in the amount of the member’s usual net pay, according to a spokeswoman.
Such loans aim to “bridge the gap and provide relief to members impacted by the government shutdown,” said PenFed’s CEO, James Schenck, in a statement.
Northeast Credit Union in New Hampshire will lend up to a month’s pay at 0% interest for 90 days, thereafter the rate is 3.99%. JSC Federal Credit Union — which serves employees of Houston’s Johnson Space Center and is offering up to $6,000 at 0% interest, like Navy Federal — has reported making nearly 800 personal loans totaling almost $3 million, putting the average loan amount at around $3,700.
When asked about the average interest rate in this type of shutdown-inspired lending, the CUNA’s Williams said “a great many credit unions” are offering “no interest for the length of the shutdown,” but the group sees “a lot of different interest rates across the board.”
In general, any employee of a federal agency hit by the shutdown is eligible for these types of loans from their credit union, Williams also said. Borrowers must be members of one of the credit unions, but people in some cases can apply now for membership and become eligible, according to the CUNA spokeswoman.
Employees of federal contractors, rather than employees of actual federal agencies, might not have the same level of access to these shutdown-related loans. When asked about offerings for contractors, Williams said: “Every credit union sets their own standards for who qualifies for their support services.” While federal employees are due to get back-pay, employees of contractors can’t count on receiving any compensation for their lost labor, in what an executive at one contractor has described as “a hellacious situation.”
Read more: Everything you need to know about bridge loans
Big banks, meanwhile, are also making an effort, with Bank of America BAC, +1.65% saying it has a “priority assistance phone line” to offer aid tailored to each federal worker’s situation. Capital One COF, +0.42% also is telling affected customers to call or visit branches to get “personalized assistance.”
Wells Fargo WFC, +0.46% says fee reversals and waivers are available to affected workers, and Citigroup C, +2.17% says its Citibank unit will refund monthly service or overdraft fees, while holders of its Citi credit cards can qualify for waivers for late fees and interest charges as well as credit-line increases. J.P. Morgan Chase’s JPM, +1.06% Chase bank is waiving or refunding some fees and telling customers to call a “special care line” for help.
Other shutdown-related moves by credit unions include waiving early withdrawal penalties on certificates of deposit and allowing members to skip a payment on prior loans, according to the CUNA. Another group that lobbies for credit unions, the National Association of Federally-Insured Credit Unions, has talked up the industry’s moves as well.
“Immediately after the shutdown began, scores of credit unions began proactively offering members that have been furloughed or affected by the shutdown access to various programs and services,” NAFCU spokesman Bobby Grant said in an email. “Some of the services include one-time loans to those whose pay will be disrupted, line-of-credit limit increases, deferred payments on existing loans and short-term, 0% APR loans to help meet expenses during the shutdown.”
About 800,000 federal employees are going without pay during the partial government shutdown, which has lasted more than a month and become the longest on record by a wide margin. The closure has been sparked by a dispute between President Trump and Democratic lawmakers over money for his proposed wall at the southern border. Two competing bills that would reopen the government failed to get enough votes in the Senate on Thursday, but the voting was still widely viewed as a step toward a spending deal that would end the shutdown — or cracks in the ice.
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