Federal Shutdown Silver Lining: Credit Unions Plugged the Holes Before Their Members Drowned in Debt
By: Beatriz Hartman, Financial Wellness Solutions Leader, KOFE
The federal shutdown was a conundrum: Even as it dragged on for a record-setting 35 days, it was a fast-moving story in the media – and might be again in three weeks, when the temporary stay could be lifted. All that has made it difficult for financial institutions to respond – especially those who serve federal workers.
Earlier this month, NAFCU reported that, “Financial industry regulators, including the NCUA, are encouraging member institutions to find ways to help borrowers that are affected by the ongoing partial government shutdown.”
Finding those ways consumed Vitalia Garcia’s thoughts. Garcia is administrative assistant for member services at the Miami Federal Credit Union – which has 3,000 members.
“It’s so frustrating,” she said right before the shutdown ended. “Our members are very anxious. Many of them live paycheck to paycheck, so even missing one means they can’t pay their bills. Some of them are struggling to buy food.”
Like many credit unions around the country, MFCU had a special assistance program that features:
- Unsecured, low-interest rate loans
- Deferred payments
- A Furlough Relief Loan featuring 60 days at no interest
- Deferred loan payments up to two monthly payments for members with existing loans
Of course, each of these features came with caveats and requirements, but MFCU, like many of its peers around the country, tried their best to help federal workers endure the worst shutdown in U.S. history.
“So far, we’re received over 100 applications” for furlough relief loans, Garcia says. Interestingly, she adds, “We’ve had some new members join our credit union” just to take advantage of those loans.”
But if the shutdown would have continued any longer, she doubted it would have been enough.
The financial stress on her members took its toll on MFCU’s staff, too. Employees’ morale suffered along with their members.
If the shutdown returns, MFCU doesn’t know what will happen, either.
"Honestly, we haven’t sat down to discuss what the next steps are if this continues,” Garcia says.