MFUME, VAN HOLLEN, ALSOBROOKS LEAD LETTER URGING FINANCIAL REGULATORS TO PROTECT FEDERAL WORKERS' FINANCIAL HEALTH AS SHUTDOWN THREATENS ECONOMIC HARDSHIP

The following information was released by the office of Maryland Rep. Kweisi Mfume:

Today, Congressman Kweisi Mfume (MD-07) sent a letter, co-led with Senators Chris Van Hollen and Angela Alsobrooks (Both D-MD), to the heads of the financial regulatory agencies calling on them to immediately issue guidance encouraging financial institutions to work with federal employees and small businesses impacted by a government shutdown and provide flexible financial arrangements.

Federal workers, contractors, and and small businesses face the prospect of struggling to make ends meet because of a crisis that was not of their doing. In the letter that Congressman Mfume, Senator Van Hollen, and Senator Alsobrooks sent today, along with 21 of their colleagues in the U.S. Congress, the lawmakers noted that similar actions were taken during past shutdowns and that financial institutions need clear regulatory assurance to act swiftly.

The letter was sent to the Federal Deposit Insurance Corporation (FDIC) Acting Chair Travis Hill, Federal Reserve System Vice Chair Michelle Bowman, Comptroller of the Currency Jonathan Gould, National Credit Union Administration Chair Kyle Hauptman, Russell Vought in his capacity as acting director of the Consumer Financial Protection Bureau (CFPB), and Conference of State Bank Supervisors Chair Tony Salazar.

"Federal workers and contractors are regular, hard-working Americans who have bills to pay and financial obligations to meet," said Congressman Kweisi Mfume. "They should not be forced into financial hardship because Republicans in the Congress refuse to take the action necessary to re-open the government while preventing American healthcare premiums from skyrocketing."

"No federal workers or contractors deserve to face economic ruin because of a shameful Republican shutdown that they have nothing to do with. That's why we're pushing to ensure that they have ways to safeguard their financial futures while we work to reopen the government. And we will keep fighting for a responsible government funding agreement one that holds this lawless president accountable and prevents a massive spike in health care costs for families across America," said Senator Van Hollen.

"While President Trump continues his callous witch hunt against federal workers, I am proud to partner with Senator Van Hollen to protect our civil servants, contractors, and small businesses here in Maryland. Federal financial industry regulators must immediately issue guidance so financial institutions can work with all those impacted by this Republican Shutdown to get them the support they need. Our civil servants deserve better," said Senator Alsobrooks.

Joining Congressman Mfume, Senator Van Hollen, and Senator Alsobrooks and Congressman Mfume on the letter are SenatorsBernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Mark Warner (D-VA), Jeff Merkley (D-OR), Kirsten Gillibrand (D-NY), Tim Kaine (D-VA), Elizabeth Warren (D-MA), Cory Booker (D-NJ), and Raphael Warnock (D-Ga.); and U.S. Representatives Suhas Subramanyam (D-VA), Jerry Nadler (D-NY), Eleanor Holmes Norton (D-DC), Don Beyer (D-VA), Dwight Evans (D-PA), Rashida Tlaib (D-MI), Gabe Amo (D-RI), Sarah Elfreth (D-MD), Glenn Ivey (D-MD), April McClain Delaney (D-MD), Johnny Olszewski (D-MD), and James Walkinshaw (D-VA).

Text of the letter can be viewed hereand below:

Dear Acting Chairman Hill, Vice Chair Bowman, Comptroller Gould, Chairman Hauptman, Acting Director Vought, and Chair Salazar:

As Americans across the country face the consequences of a government shutdown, we write to you to address concerns about how this may impact our nation's government employees, and how this can be addressed through your oversight. While federal law mandates that federal employees and the military receive back pay when the government reopens, the lapse in pay creates serious challenges for families. We hope that you will encourage and support banks and credit unions in efforts to provide flexible financial arrangements for their customers who endure temporary financial hardship due to a government shutdown beyond their control.

This government shutdown will cause pay interruptions for millions of federal employees, servicemembers, and federal contractors. Unexpected income shocks are a key driver of penalty fees, such as credit card late fees, overdraft fees, and minimum balance fees. Customers facing a temporary income shock could easily fall below the standard minimum balance required to uphold the terms of free checking accounts, triggering account maintenance and penalty fees.

Unexpected fees further strain government employees and servicemembers already struggling to cope with not being paid through no fault of these employees. Expenses continue even as income is halted, forcing even the most financially responsible federal employees and servicemembers to use savings to cover short-term expenses. Federal employees and servicemembers may be forced to utilize credit to make ends meet, adding to the concerningly high level of consumer credit card debt held nationwide. The monthly cost of holding credit card balances has increased as Annual Percentage Rates (APRs) have risen in tandem with the Federal Funds Rate, causing the overall cost of credit to rise significantly for those who use it. This will compound the harm that Americans are feeling right now from rising inflation fueled by tariffs, a declining labor market, and the possibility of healthcare becoming increasingly unaffordable efforts that we are fighting for in our work to fund the government.

We urge you to issue updated guidance encouraging your regulated institutions to work with individuals and small businesses impacted by the government shutdown. We hope that financial institutions will recognize the temporary hardship caused by unexpected gaps in pay and respond by taking steps to prevent adverse information from being reported in a manner that harms consumers affected by a shutdown. Institutions can proactively work with customers to provide modified credit arrangements in order to prevent derogatory information from being reported to consumer reporting agencies. We ask that you work with, and encourage, your regulated institutions to provide flexible alternatives to financial arrangements that put their customers in a temporarily compromising financial position, recognizing that this is temporary and not reflective of the customer's true risk profile. Institutions that work with their customers to provide flexible financing arrangements and place loans in forbearance need reassurance that these actions will be taken into consideration in supervisory practices. We ask that you consider encouraging banks and credit unions to temporarily waive minimum balance, overdraft fees, and late fees for any individual or small business impacted by the shutdown.

These actions would mirror steps financial regulators made in past shutdowns. However, since the last shutdown in 2019, the financial system has faced increased stress due to interest rate risk, and the bank failures in 2023 have highlighted a stronger need for focused, concerted balance sheet management. As institutions may be reluctant to take proactive steps to assist customers, it is critical that joint guidance be issued to reduce uncertainty and empower institutions to provide flexibility to federal employees and servicemembers while mitigating any clear risk factors.

The economic cost of a shutdown is not isolated to just workers in the District of Columbia and surrounding regions. Data from the Census Bureau and the Office of Personnel Management demonstrates that federal workers reside in every Congressional District in America, meaning that local economies across the country will be harmed by federal worker furloughs.

We will make every effort to reopen the government quickly. In the meantime, we urge you to work with financial institutions to reduce burdens on federal employees and servicemembers who experience a lapse in pay through no fault of their own.