US Federal Reserve asks institutions to support those impacted by government shutdown

The US Federal Reserve has encouraged financial institutions to work in support of consumers that have been impacted for the federal government shutdown.

Five federal financial institution regulators and state regulators have made this suggestion

A statement from the Federal Reserve said, “While the effects of the federal government shutdown on individuals should be temporary, affected borrowers may face a temporary hardship in making payments on debts such as mortgages, student loans, car loans, business loans, or credit cards.

“As they have in prior shutdowns, the agencies encourage financial institutions to consider prudent efforts to modify terms on existing loans or extend new credit to help affected borrowers.”

The Reserve also said that ‘prudent’ workout arrangements which are consistent with ‘safe-and-sound lending practices’ will be of long-term interest to financial institutions, borrowers and the economy. It also said that these efforts should not be met with examiner criticism.

Around 800,000 federal workers, which includes tax collectors and FBI agents, failed to receive a paycheck last Friday due to the 21-day expiration of government funding, an article from Reuters claims.

Consumers which have been impacted by the government shutdown have been asked to contact their lenders immediately if they are in financial strain.

Late last year, the US Federal Reserve made a joint statement with four other US regulators to encourage depository institutions to explore innovative ways to meet compliance. Its joint statement is aimed at supporting the development of innovative solutions for bank secrecy act (BSA) and anti-money laundering (AML) compliance and strengthen the financial system from attacks.

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