Banks Are Urged to Work With Borrowers Hit by Shutdown; Regulators Caution Bank Examiners Against Faulting Institutions
WASHINGTON--U.S. banks should work with borrowers at risk of missing loan payments because of the partial government shutdown, banking regulators said on Wednesday.</br></br>The regulators said the effects of the shutdown should be temporary and cautioned bank examiners against faulting institutions that make "prudent efforts to modify terms on existing loans" in order to ensure borrowers can stay out of default. The shutdown, which has dragged on for more than a week, has resulted in the furlough of hundreds of thousands of U.S. government workers and has limited U.S. payments to contractors and other businesses.</br></br>The regulators said borrowers affected by the shutdown should contact their lenders immediately "should financial strain occur."</br></br>"Affected borrowers may face a temporary hardship in making payments on debts such as mortgages, student loans, car loans, credit cards, and other debt," said the regulators, including the Federal Reserve, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corp., the National Credit Union Administration, and the Office of the Comptroller of the Currency. "The agencies encourage financial institutions to consider prudent workout arrangements that increase the potential for creditworthy borrowers to meet their obligations."</br></br>The regulators generally reserve such leniency requests for natural disasters, such as hurricanes.