The U.S. Government Shutdown and Your Money
INDIANAPOLIS - As of Oct. 1, the federal government has shut down for an indeterminate period of time, and consumers may have concerns about access to their money and other banking services. The Indiana Bankers Association, of which First Merchants Bank and its divisions are members, would like to offer some assurances:
- Bank deposits are safe. Banks continue to operate during normal business hours, ATMs are still open, and deposits remain insured by the Federal Deposit Insurance Corp. (FDIC) up to $250,000. FDIC insurance is unaffected by the shutdown, because it is paid for by banks, not from taxpayer money.
- Social Security and Medicare payments will continue. These payments are funded through payroll taxes and will continue throughout the duration of the shutdown.
- Most loans remain available. Both Fannie Mae and Freddie Mac are largely unaffected by the shutdown, as their operations are funded by fees charged to lenders, allowing loans to continue to be available to consumers. This same situation applies to VA loans. Be aware, though, that the tax transcripts from the IRS, which may be required by some vendors to close loans, are not currently available.
- Note: Some government-guarantee loans may not be available. The Farm Service Agency (part of the Department of Agriculture), the Federal Housing Administration and the Small Business Administration will temporarily continue to process loans, but at a significantly reduced rate. Consequently it is likely that there will be a backlog that could keep banks from offering consumers these products. As noted in item No. 3, however, Fannie Mae and Freddie Mac are not affected.
- Banks remain regulated. The primary banking regulators — the Federal Reserve Board, the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp. — are funded by the banks they regulate and therefore are not subject to the federal budget.
Throughout the shutdown, most customers and bank services will not be affected. In the meantime, Hoosiers may rest assured that the taxpaying Indiana banking community continues to offer uninterrupted service to consumers.
See the full IBA Consumer Tips new release.
This information is provided with the understanding that the association is not engaged in rendering specific legal, accounting or other professional services. If specific expert assistance is required, the services of a professional should be sought. Provided as a public service by the Indiana Bankers Association.