From the loss of the panda cam at the National Zoo to an interruption in flu season monitoring by the Center For Disease Control and Prevention, the government shutdown is already affecting people in a number of inconvenient and even potentially dangerous ways.
The most direct of these, of course, is the delay of a paycheck for over 1 million federal employees who will continue working during the shutdown and the indefinite furlough of nearly 800,000 non-essential employees who may receive $0 pay for this period, according to the Washington Post.
Despite all the negative consequences facing their members and the country, credit unions are hardly powerless in this situation.
Taking The Sting Out Of Furloughs
Whenever previous shutdowns loomed on the horizon, credit unions — especially those with a large military or government membership base — stood ready with products and services to assist furloughed workers. Now, these institutions have the opportunity to actually put such measures into action.
For example, Wright-Patt Credit Union ($2.7B, Fairborn, OH) is currently offering members an unsecured loan equal to their bi-monthly pay. While the posted rate is 6.25% APR, members pay no interest whatsoever if the loan is paid back in full in one month’s time. Those federal employees who have an existing consumer loan with Wright-Patt can take advantage of a skip a payment offer without any negative consequences.
Likewise, Members 1st Credit Union ($106M, Redding, CA) and Kennedy Space Center Federal Credit Union ($641M, Merritt Island, FL) are both offering local, federally-employed members a loan of up to $3,000 with no interest for as long as 12 months.
Preparing For Business Obstacles
The loss of nearly $300M in GDP per day, along with limitations on government services, may soon create a trickle-down effect for many industries. As a result, even credit unions without a specialized membership may see some impact.
For example, if the shutdown goes unresolved for several weeks, credit unions may have difficulty securing IRS tax transcripts to confirm borrower income. And a planned 96% staff furlough at the FHA as well as a 62% employee furlough at the SBA could temporarily eliminate access to some loan options while creating a backlog for others.
Minimizing Collateral Damage In The Community
The shutdown is a potent reminder of how easily individuals can be put into harm’s way when government resources like Veteran benefits or the Women, Infants and Children program go on indefinite haitus.
While this particular shutdown may soon be resolved, credit unions should see this event as a reminder of the need to find new and better ways to support all segments of their community at a local level.
For example, Alabama Credit Union ($597M, Tuscaloosa, AL) currently partners with area food banks for a program called Secret Meals For Hungry Children, which provides guaranteed nutrition for disadvantaged youth on the weekend when school meals are not available. Each year, cooperative institutions also raise millions for healthcare, medical research, and other philanthropic causes as an effective complement to government investments in these activities.
Credit unions don’t shut down when the going gets tough and now is a great time to reiterate that fact with proactive, long-lasting community outreach and renewed philanthropic action.