Dems Push Consumer Protection Legislation Ahead of Potential Shutdown
Guidance would impact credit unions and banks.
As the federal government lurches toward a possible shutdown next month, a group of House Democrats is pushing legislation that would require banking regulators to issue guidance encouraging banks and credit unions to protect consumers from the impact of a shutdown.
“I’ve heard horror stories from constituents who were denied mortgages and feared for the harmful impacts their credit could suffer during previous shutdowns, which is why I’m introducing legislation to protect Americans from the financial fallout of a shutdown,” said Rep. Jennifer Wexton, D-Va.
Under H.R. 5739, regulators would be required to publicly share the guidance no later than 24 hours after the start of the shutdown. In addition, they would have up until 90 days to submit a report analyzing the effectiveness of the guidance and the measures they took to protect consumers.
Much of the federal government is operating under a Continuing Resolution that expires on Nov. 17. Without additional action by Congress, many federal agencies would shut down and employees temporarily would not be paid.
The NCUA and the CFPB are not funded through federal appropriations, so they would not be affected by the shutdown.
Details of Guidance
H.R. 5739 would require the financial regulators to issue guidance that would:
–Encourage financial institutions to recognize that consumers and businesses may lose access to credit and face temporary hardships making loan payments.
–Recommend that credit unions and banks consider prudent efforts to modify terms of existing loans or extend credit to help consumers affected by the shutdown.
–Encourage institutions to ensure that no adverse information is reported to credit reporting agencies that harms consumers harmed by the shutdown.
The bill is co-sponsored by 11other Democrats, many of whom represent the Maryland and Virginia suburbs of the nation’s capital.
Senate Democrats’ Letter
On the Senate side, a group of Democrats last month sent banking regulators a letter asking them to encourage financial institutions to help consumers mitigate the impact of a government shutdown.
Even without the legislation, federal financial regulators have released similar guidance in the past.
For instance, in 2019, agencies encouraged “financial institutions to consider prudent efforts to modify terms on existing loans or extend new credit to help affected borrowers.”
Credit Unions Already Helping
And as government funding was uncertain late last month, credit unions, including PenFed Credit Union, announced a series of measures designed to assist members. For instance, PenFed said it would offer no-interest loans for members who have their paychecks directly deposited into their accounts.
At the time, PenFed officials noted that they had supported its members through 21 government shutdowns since 1976.