Hundreds of thousands of federal government workers, from the Coast Guard to the National Weather Service, face another unpaid payday on Friday, and Commerce Secretary Wilbur ross suggests they get a loan to cover it.
Thursday on CNBC “Squawk Box“Ross admitted that he had heard that some federal workers affected by the extended shutdown were going to shelters for food, but said he didn’t understand why.
“I know they are [going to homeless shelters] and I don’t really understand why because, as I mentioned before, the bonds they would take – say borrow from a bank or a credit union – are actually guaranteed by the federal government, ”Ross said. won’t be available – there’s no real reason why they shouldn’t be able to get a loan and we’ve seen a number of announcements from financial institutions do so. “
Banks and credit unions are offering affected workers interest-free loans to cover some or all of their paychecks, he said.
“When you think about it, these are basically government guaranteed loans because the government has made a commitment, these people will be repaid once this is all sorted out,” Ross said. “So there really isn’t a good excuse for there to be a liquidity crunch. Now it’s true people might have to pay a little interest, but the idea is. a paycheck or zero is not a really good idea. “
But workers will have to shop. Three of the biggest banks, JPMorgan Chase, Bank of America and Wells fargo, do not offer loans, but waive fees and provide other assistance. The Navy Federal Credit Union offers loans, but they are only available to some of its 8.1 million members. And others, like the Home Office’s credit union, say they have delays in granting closing loans due to the high volume of applications.
Ross also said the economic ramifications of the shutdown – the fact that 800,000 workers go unpaid – are hardly a mistake on the radar of the US economy. In theory, if workers never got their back pay, “you’re talking about a third of a percent of our GDP. So it’s not like that’s a gigantic number overall.”
The comments unleashed criticism from Democrats as lawmakers still tried to find a way to reopen government. New York Sen. Chuck schumer tweeted that Ross’s comments were “unreal”.
And home speaker Nancy Pelosi, responded to Ross’s comments. “Is that the kind of attitude to let them eat cake?” Or call your dad for money? Or is it character building for you? Is everything going to end very well for you as long as you get your paychecks? “
West Virginia Sen. Joe manchin, also a Democrat, called the remarks “muted.” “I’ve been all over West Virginia, people are suffering,” he said. “They don’t have cash. Making decisions, do I put gas in the car or feed the kids? It’s real.”
Navy Federal Credit Union, the world’s largest credit union whose members include workers from the Coast Guard and other armed services and several government agencies, has an interest-free loan program that will cover half of the entire amount. a missing paycheck up to $ 6,000 per pay period. no credit check required. The catch is that workers can’t access the loan program if they don’t already have a direct deposit account.
Some 19,000 of the estimated 100,000 Federal Navy members eligible for the program signed up to have their first paycheck covered earlier this month and more are expected to sign up to cover this week’s check, a spokesperson. He would not disclose how much money had already been disbursed.
“We wanted to make sure members have some financial certainty in these uncertain times,” said Tynika Wilson, senior vice president of debit card and funds services at Navy Federal.
The Pentagon’s Federal Credit Union, which has 1.7 million members, has two offers. For affected workers who already have a direct deposit account, it offers an interest-free advance on an overdraft line of credit in the amount of the most recent paycheck up to $ 6,000. This is available for those who have been PenFed members for 12 months and direct deposit from an agency on leave.
PenFed also has a fixed rate unsecured loan for any affected federal worker. But this is subject to income verification and credit guidelines.
USAA Federal Savings Bank has an active Coast Guard and Reserve loan program and National Oceanic and Atmospheric Administration and Public Health Service workers and their spouses. The offer is a one-time low-interest loan of at least $ 2,500 at an annual interest rate of 0.01% that can be repaid over 12 months. It is subject to credit approval.
SunTrust, a south-eastern regional bank, granted a 90-day interest-free, payment-free loan to affected workers who are the bank’s customers at the end of December. The loans are from $ 3,000 to $ 10,000, subject to certain credit conditions.
– Jacob Pramuk and Dan Mangan of CNBC contributed to this report.