Commerce Secretary to Unpaid Federal Workers: Let Them Get Loans
Commerce Secretary to Unpaid Federal Workers: Let Them Get Loans
(Bloomberg) -- U.S. Commerce Secretary Wilbur Ross expressed bewilderment over unpaid federal workers who are seeking charity to feed themselves, saying they should be able to borrow money during the government shutdown.
“I don’t really quite understand why,” Ross told CNBC in an interview on Thursday in response to reports that some federal workers are going to homeless shelters to get food. “Borrowing from a bank or a credit union are in effect federally guaranteed. So the 30 days of pay that some people will be out, there’s no real reason why they shouldn’t be able to get a loan,” he said.
The longest shutdown in U.S. history entered its 34th day on Thursday, affecting some 800,000. Pressure is building on President Donald Trump and both parties in Congress to resolve the dispute, as the furloughed workers will miss their second paychecks on Friday.
The remarks by Ross, a wealthy former private-equity investor, were swiftly rebuked by Democrats for failing to understand how many ordinary Americans get by.
House Speaker Nancy Pelosi said in a tweet that “this just goes to show how out of touch Trump, his cabinet and Republicans in Washington are. They just don’t understand what it means to live paycheck to paycheck.”
Whether in protest or out of necessity, a growing number of federal workers whose jobs have been deemed essential are calling in sick or claiming hardship exemptions. Lines at some airport-security checkpoints are growing as Transportation Security Administration employees, who are working without pay, call in ill.
Ross brushed the argument aside that such workers cannot make ends meet without finding other work, arguing that while people might have to pay a little bit of interest to borrow, “there really is not a good excuse why there really should be a liquidity crisis.”
Trump later defended him.
“I haven’t heard the statement but I do understand that perhaps he should have said it differently,” the president told reporters at the White House. “I think that what Wilbur was probably trying to say is they will work along. I know banks are working along.”
The American Bankers Association said many of its members are offering a range of assistance to clients who are federal employees affected by the shutdown, including fee waivers, loan modifications, payment deadline extensions, payroll advances and zero-rate loans. The Credit Union National Association said credit unions were offering members low- or zero-interest loans.
But one lender disputed Ross’s characterization of borrowing against a federal salary as “basically government-guaranteed loans.”
“That’s because there’s no guarantee that the person will give us back the money,” said Jeff Dick, chairman and chief executive officer of MainStreet Bancshares Inc. in Fairfax, Virginia. “But we can make such a loan based on character, if that worker has had a longstanding relationship with us.”
--With assistance from Andrew Mayeda, Jennifer Epstein and Justin Sink.
To contact the reporters on this story: Alister Bull in Washington at abull7@bloomberg.net;Chibuike Oguh in Washington at coguh1@bloomberg.net
To contact the editor responsible for this story: Brendan Murray at brmurray@bloomberg.net
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