Congressman Suhas Subramanyam (D-VA) final week launched two payments to guard federal employees and contractors from monetary hurt throughout authorities shutdowns.
Shutdown Steerage for Monetary Establishments Act
The primary invoice — the Shutdown Steerage for Monetary Establishments Act (H.R. 5689) — would defend federal staff, contractors, and others from the monetary impacts of a authorities shutdown by “offering and inspiring finest practices for banks, credit score unions, and different monetary establishments to work flexibly with individuals impacted by shutdowns.”
“Throughout earlier shutdowns, these people have suffered monetary hardship by no fault of their very own.” Subramanyam’s workplace wrote in a press assertion. “Along with the stress of being furloughed or working with out pay, federal employees and contractors discovered themselves at risk of being denied mortgage and mortgage purposes, lacking month-to-month funds, and having adversarial info damage their credit score rating, affecting each common monetary transactions and safety clearance investigations.”
Particularly, this invoice would require federal monetary regulators, such because the Federal Reserve, Shopper Monetary Safety Bureau, and Nationwide Credit score Union Affiliation, to proactively problem steerage to monetary establishments regarding authorities shutdowns inside 180 days of enactment. This steerage would instruct these establishments to:
- Acknowledge that buyers and companies affected by a shutdown might lose entry to credit score and face short-term hardship in making funds on money owed corresponding to mortgages, pupil loans, automotive loans, enterprise loans, or bank cards.
- Take into account prudent efforts to switch phrases on current loans or prolong new credit score to assist shoppers and companies affected by a shutdown, in step with safe-and-sound lending practices.
- Take steps to forestall adversarial info being reported and utilized in any method that harms shoppers affected by a shutdown, together with by stopping modified credit score preparations supposed to assist shoppers fulfill their monetary obligations from being reported to, and coded by, shopper reporting businesses on a shopper’s credit score report in a way that hurts the creditworthiness of the buyer.
Regulators could be required to problem a joint press launch to alert monetary establishments, shoppers, and companies of the existence of this steerage no later than 24 hours after the beginning of a shutdown.
Emergency Aid for Federal Contractors Act
The second invoice — the Emergency Aid for Federal Contractors Act (H.R. 5690) would permit federal contractors affected by a authorities shutdown to make withdrawals from their retirement accounts with out incurring the ten % early distribution penalty.
Underneath present regulation, retirement savers who’re age 59 ½ or youthful could also be topic to an extra 10 % early withdrawal penalty for withdrawing funds from their retirement accounts. The invoice waives the ten % price for as much as $30,000 in disbursements, offering emergency aid to contractors, a lot of whom aren’t paid throughout shutdowns and don’t obtain again pay afterwards.
