By Scott Simpson
As the federal government shutdown heads into a second month and the history books, it’s crucial to recognize that 85% of the three-million federal employees, including American troops, live and work outside the Washington, D.C., area.
This means that as the shutdown halts federal paychecks, the pain ripples across the nation, hitting hardworking families, local economies, and small businesses. Millions of households with already stretched incomes are struggling to pay bills, cover mortgages and rent, and even buy groceries.
This economic crisis calls on America’s financial institutions to help struggling families. The 4,400 credit unions serving communities in all 50 states are answering the call in ways most others can’t and demonstrating what their core mission of “people helping people” truly means.
Crises Test Missions
Crises test missions and mettle. While humble, the people who power credit unions are demonstrating unsung heroism by helping their neighbors in need.
Credit unions are providing furlough assistance and paycheck protection loans at zero or low interest rates. Many offer payment deferrals and extensions on mortgages, auto loans, and credit cards, and waive late fees, early withdrawal penalties for CDs, and ATM charges. Some credit unions offer emergency lines of credit. On top of that, credit unions provide financial counseling services to help members budget and regain their financial stability.
Diverse & Creative Solutions
The creative solutions that credit unions offer struggling federal workers are as diverse as the members and communities they serve.
For example, California’s Educational Employees Credit Union in the provides a no-interest loan of up to $10,000 for up to 30 days. Peninsula Credit Union in Washington offers up to three skipped loan payments per calendar year, no-fee cash advances, refinance fee waivers, and emergency paycheck advance loans. Houston-based TDECU launched furlough relief loans of up to $5,000 with 12- or 24-month terms, giving members 90 days to make their first payment.
Credit unions offer federal workers better benefits and terms than traditional banks. How? Because unlike banks, credit unions are not-for-profit, member-owned financial institutions. Their field-of-memberships are affiliated with a major local employer to serve federal workers or a military base to meet the specific banking needs of service members and their families.
Original Concept Remains Strong
Many credit unions began when ordinary people pooled savings to offer affordable loans and established volunteer-led, community-centered funds built on mutual trust. Many were created as alternatives to profit-focused banks, to meet the financial needs of people and communities that banks often neglect. The original “people helping people” spirit that ignited the credit union movement remains strong today, especially in difficult times.
The credit union industry’s response to the government shutdown-induced paycheck crisis is at the heart of who we are and influences every decision we make. When a crisis occurs, your primary goal is to protect your members. Their well-being takes priority over your own.
Your stories about people helping people during emergencies—like credit union staff working overtime to approve emergency loans or members who kept food on the table because their credit union stepped up—reinforce the need for credit unions in our financial services system.
Carrying a Legacy Forward
This is the legacy of over a century of credit union public service that I’m honored to carry forward as the successor to Jim Nussle in leading America’s Credit Unions. It is a noble legacy championed by the members and employees of the credit union movement that defeated attempts on Capitol Hill to impose a burdensome tax that would destroy our mission, impose a worse deal on workers and military families, and eliminate a benefit employers rely on to attract and retain the talent they need in this fluid workforce market.
My #1 goal leading the national association of our movement is to listen and share our voices with policymakers in Washington to advance three objectives: To protect the credit union nonprofit tax structure that allows us to act swiftly and with flexibility in a crisis; to empower members with low-cost credit, education, and guidance to help them build financial resilience; and to advance opportunity by expanding access to credit unions and reaching communities left behind by traditional finance.
The Spirit of Giving
This time of year fuels the spirit of giving. And that’s the spirit of the credit union community—a spirit of service, both in regular times and especially challenging times like these.
Scott Simpson is president & CEO of America’s Credit Unions.
