Minnesota CUs Prepared As Shutdown Continues

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ST. PAUL, Minn. – With Minnesota’s government shutdown entering its second week, credit unions across the state are prepared to assist members affected by the work stoppage. But many people interviewed by Credit Union Journal said that the shutdown’s effect – at least so far – had been minimal.

“It’s actually been really quiet,” said Rachel Anderson, director of communications for the Minnesota Credit Union Network. She said the league had expected to receive a lot of inquiries from CUs throughout the state with questions or problems related to the government shutdown, “but we haven’t received a lot of those calls.”

One reason many state employees aren’t feeling the stress is that while there is a shutdown, state workers still have another paycheck coming on July 15, according to Jeff Schwalen, CEO at Hiway FCU, who noted that much of the state has taken a “wait and see” approach to the crisis. About 10% of Hiway’s 59,000 members are state employees. The CU serves employees of the Department of Transportation as well as the Highway Patrol. Schwalen said that about 250 members so far have taken advantage of a free skip-a-pay program being offered. But he said that most members have not yet had “a dramatic need for help.”

That pending paycheck has helped to temper response, noted Schwalen. “Most people still have cash or will get cash, so they’re not in dire distress,” he said.

Schwalen predicted that the shutdown could run 30 days or more, and said the $833-million institution was working on putting together a short-term loan product to offer members, though details had not yet been finalized. He said he hoped to be able to offer the product by the end of next week.

A life-long Minnesotan with more than two decades at the credit union, Schwalen said he could only remember one other such crisis in the state – a shutdown during Gov. Tim Pawlenty’s administration in 2005. That shutdown lasted less than a full day.

While the secretary of state’s office is open – enabling CUs to conduct UCC filings – certain divisions of Minnesota’s Department of Commerce have been shut down, including that which conducts examinations at financial institutions.

“It’s one of those things where they close everything down and as the days pass by, somebody in Ramsey County is going through  petitions and looking at what is considered essential services,” said Anderson. She explained that the longer the shutdown continues, more and more state offices are being considered essential, but by and large it is having little effect on CUs.

Bill Raker, CEO at $820-million U.S. FCU, estimated that about 5% of his credit union’s 68,000 members were state employees. As was the case with many others, U.S. FCU is offering bridge loans and skip-a-payment programs for those affected by the stoppage.

“We understand the implications if this is a prolonged shutdown,” said Raker. “Our ability to work with our members is pretty solid and the commitment is certainly there. We know they can’t make loan payments if they don’t have income. We’re prepared to work with them and extend the breaks they need to keep food on the table and stay in their homes.” Additionally, the credit union is running seminars and financial counseling for those affected by the crisis.

Jerard Rasmussen, CEO at 210-member Northcountry Cooperative FCU in Minneapolis, said because of his credit union’s niche nature – it only does loans to members purchasing shares in individual housing cooperatives – it has been relatively unaffected by the shutdown thus far. But he worried that the crisis could extend for as much as another six to eight weeks. He said while the $6.8-million credit union is currently able to work with those who have problems making payments, flexibility becomes more difficult the longer the shutdown continues, and may later depend on if the member has savings to rely on or is in a “paycheck-to-paycheck” situation.

Still, U.S. FCU’s Raker said there is a sense throughout the community that everyone is in the same boat together, and that the members haven’t done anything wrong to put themselves the sort of situations that require bridge loans or skipping payments.

“These are good people who have jobs,” said Raker. “It’s not like they’re talking about laying off these people. We know that they’ll be back and work and that they will get paid and they’ll bring their debts current. We believe in the good side of human nature.”

 

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