WASHINGTONCredit unions here and across the nation are rolling out offers to assist members in the event of a possible government shutdown.
In the event of a shutdown, however, it’s unclear how many members will take advantage of assistance from their CUs, such as low-rate loans, skip-a-payment programs, penalty-free CD withdrawals and more.
CU executives told Credit Union Journal that many of their offers are nearly identical to what was made available earlier this year in advance of the ongoing sequestration. And member response to sequestration assistance was tepid at best.
“It’s hard to tell what people are going to do,” said Joan Moran, CEO at Department of Labor FCU. “The difference between sequestration and a shutdown is that they do actually lose pay. Last time there was a furlough they were paid retroactively, but that’s not a guarantee. It’s more of a wait and see’ for our members on how they’re going to act.”
And though her CU offered sequestration loans earlier this year, Moran said there were “very few takers.” She noted while each agency handled the situation differently, the Labor department was able to offer flexible scheduling to help employees deal with furlough days.
But that could change later this month if the government actually shuts down.
Peter Sainato, CEO at Justice FCU, which serves the Departments of Justice and Homeland Security, said while there wasn’t much response to sequestration assistance offers, a bigger members response could be coming in October.
“Sequestration didn’t really hit in the 2013 fiscal year, but I do believe that in the fiscal year beginning on Oct. 1, our members will be impacted.”
And while there was minimal response to Navy Federal’s offers of sequestration aid, a shutdown could change that, said Jeanette Mack, manager of corporate communications at the nation’s largest CU.
A shutdown will include active duty military, Mack noted, and furloughs are probably going to continue for civilian workers in the Department of Defense. “A shutdown just means that what is already happening to ivilian workers will continue, and might ensnare some who have not yet been affected,” she said.
At Navy FCU, active duty military members will not be furloughed, though a shutdown could mean delays in paychecks. The CU is planning to cover the Oct. 15 payroll for active-duty members. At press time, decisions had not been made about the next payroll on Nov. 1 and beyond, according to Mack.
At The Branch
For now, Navy Federal has not received any indication that it will have to close branches in the event of a shutdown, said Mack.
Similarly, Department of Labor’s Moran said that DOL will allow CU employees into the facility in the event of a shutdown even while nonessential Labor department employees are prohibited, allowing the credit union to field phone calls and e-mails, fundloans and more.
Ironically, said Moran, most of the CU’s members are adept enough at using e-services that she suspects that most requests for assistance will come in through electronic channels even if staff is in the branch.
Other CU were not as optimistic about the branch situation.
“If there’s a shutdown, our branches will likely be shut down as well, because they’re certainly not essential personnel,” said Justice FCU’s Sainato. “We have alternate [branch] locations established. We’re hopeful that this is a short-term issue. Of course, if it’s prolonged we’ll have to revisit the staffing issue.”
Sequestration aside, many industry insiders predicted that a shutdown will be averted - probably at the last minute.
“I don’t think we would see more people taking advantage of the shutdown assistance” compared to sequestration aid, said Evan Clark, CEO at Department of Commerce FCU. “I think the chances of a shutdown happening are very lowand if there is a shutdown, the people asked to come in will be reimbursed retroactively.”
At Navy FCU, “we’re following what DOD and Pentagon officials are reporting, and they’re estimating about a 40% chance” of a shutdown, said Jeanette Mack.
Justice FCU’s Peter Sainato also believes a last-minute compromise is likely. “I believe that at the 11th hour we’ll have an agreement, and they’ll kick the can down the road avoiding the government shutdown.”
That would come as a relief to manyespecially since several CU sources said they did not know how their credit unions dealt with the government shutdown of the mid-1990s. But Moran noted that the definition of good member service hasn’t changed much in the last 18 years.
“In the 1990s the technology was so different, so we did physically have to come in to post ACH files, to post share draft files,” she said. “But we were allowed physically to get into the building to make sure the money flow kept going, so that’s what we did. We’re pretty much doing the same thing - it’s just easier now.”
