Shutdown Guidance for Financial Institutions Act
The Shutdown Guidance for Financial Institutions Act would require the main federal financial regulators to issue joint guidance within 180 days of enactment that encourages banks and other regulated lenders to work with consumers and businesses affected by a federal government shutdown. The guidance would urge lenders to recognize hardship caused by a shutdown, consider prudent loan modifications or new credit extensions, and prevent adverse reporting to credit bureaus that could worsen a borrower’s credit during the shutdown. In addition, the bill requires a rapid 24-hour public notice at the start of any shutdown, a post-shutdown congressional report evaluating the guidance’s effectiveness within 90 days of shutdowns ending, and an updated guidance within 180 days after that report if shortcomings are found. The bill defines who is “consumers affected by a shutdown” and “consumers and businesses affected by a shutdown”, and it identifies the federal regulators covered (the Fed, CFPB, OCC, FDIC, and NCUA). In short, the bill seeks to formalize a coordinated, lender-friendly response during government shutdowns to help furloughed federal workers, DC government employees not paid during a shutdown, and federal contractors or affected businesses manage debt and avoid punitive credit reporting, while keeping the guidance updated and assessed after each shutdown.
Key Points
- 1Guidance timeline and scope: Federal financial regulators must jointly issue shutdown guidance within 180 days of enactment, in consultation with state regulators and other appropriate agencies, encouraging lenders to assist affected borrowers and to consider loan modifications or new credit if prudent and consistent with safe lending.
- 2Credit reporting protections: Guidance should require lenders to avoid reporting modified arrangements in a way that harms a borrower's creditworthiness, preventing adverse credit reporting tied to efforts to fulfill financial obligations during a shutdown.
- 3Immediate notice and awareness: Within 24 hours of a shutdown’s start, regulators must issue a press release to alert financial institutions, consumers, and businesses to the guidance and its content.
- 4Post-shutdown assessment and updates: Within 90 days after a shutdown ends, regulators must report to Congress on the guidance’s effectiveness, and within 180 days after that report, update the guidance if shortcomings are found.
- 5Definitions and scope: The bill defines “shutdown” as a lapse in appropriations longer than 24 hours, and lists who counts as “consumers affected by a shutdown” (federal employees, DC employees not paid, federal contractors or other businesses with substantial pay reductions) and “consumers and businesses affected by a shutdown” (including the contractors/businesses themselves). It also specifies the five federal regulators covered by the act.