Today, Congresswoman Jennifer Wexton (D-VA) introduced the Shutdown Guidance for Financial Institutions Act. This legislation would require federal financial regulators to issue guidance encouraging banks and other financial institutions to work with consumers and businesses affected by a federal Government shutdown.
This legislation was drafted by the Congresswoman in response to correspondence from a furloughed federal employee whose mortgage application was nearly denied because her mortgage lender wrongly considered her unemployed and too much of a risk to finance.
Congresswoman Wexton’s bill would ensure financial institutions receive guidance from the federal government so that they can take the necessary steps to prevent scenarios like this from occurring in the event of a future government shutdown.
“I came to Congress to advocate for my constituents,” said Congresswoman Jennifer Wexton. “I heard directly from one who was denied a mortgage due to a government shutdown she couldn’t control—and I knew there were many more stories like hers. Federal workers and contractors are expected to shoulder the financial burdens incurred from a government shutdown they can’t control or predict.”
“I remain committed to doing everything in my power to prevent future government shutdowns, but given the actions of this administration and its disregard for federal workers and contractors, I will continue to work to safeguard our federal workforce should a government shutdown occur.”
Federal financial regulators will, in consultation with State banking regulators and other appropriate Federal and State agencies, issue shutdown guidance to the financial institutions they regulate encouraging the financial institutions to:
Work with consumers and businesses affected by a shutdown;
Recognize that consumers and businesses affected by a shutdown may lose access to credit and face temporary hardship in making payments on debts such as mortgages, student loans, car loans, business loans, or credit cards;
Consider prudent efforts to modify terms on existing loans or extend new credit to help consumers and businesses affected by a shutdown, consistent with safe-and-sound lending practices; and
Take steps to prevent adverse information being reported and utilized in any manner that harms consumers affected by a shutdown, including by preventing modified credit arrangements intended to help consumers fulfill their financial obligations from being reported to, and coded by, consumer reporting agencies on a consumer’s credit report in a manner that hurts the creditworthiness of the consumer.
Federal financial regulators will provide guidance no later than the end of the 24-hour period beginning at the start of a shutdown.
Not later than the end of the 90-day period beginning on the date a shutdown ends, Federal financial regulators shall, jointly, issue a report to Congress containing an analysis of the effectiveness of the guidance issued and what steps financial institutions took during the shutdown.
The full text of the Shutdown Guidance for Financial Institutions Act can be found here.