CUs Reveal How They're Dealing With the Government Shutdown

Government shutdowns may seem like rare events, but for the McLean, Va.-based Pentagon Federal Credit Union, they’re all too familiar – this is the 21st shutdown it has endured. For better or worse, all that practice has taught the credit union, which has $24 billion in assets, some useful lessons in how to help members and manage operations when so much is up in the air.

PenFed serves the military, as well as employees of the Department of Defense and the Department of Homeland Security, among other groups. It has about 1.7 million members, over 350,000 of whom are in the Washington, D.C. metro area, PenFed EVP of Corporate and Business Development Ricardo Chamorro told CU Times.

“We understand the hardship that is facing our federal employees … this puts an unnecessary hardship on all of them, so our heart goes out to them,” he said.

“This is our 21st shutdown, and perhaps because of our scale and breadth and experience, things like this don’t catch us by surprise,” Chamorro added. “It’s basically part of our mission to be prepared for instances like this one.”

One of the biggest lessons for the credit union so far has been that member communications are key during a shutdown. That’s because one of the biggest challenges is making sure existing and prospective members know about the credit union’s relief programs, Chamorro noted.

PenFed currently offers skip-pay arrangements, as well as subsidized furlough loans. A third option provides zero-interest advances.

Previous shutdowns have given the credit union time to learn what works for members.

“The skip payment option and the reduced personal loan option have been around before this shutdown. The no interest or 0% APR loan is a fairly new offering,” Chamorro noted.

Branch traffic has been stable so far, he said.

“We’re broadly a mobile-platform technology company in many ways,” he explained. “It’s not our first rodeo, and we have the resources and the wherewithal to be able to support this.”

PenFed has implemented some changes to its website, email and call center strategies during the shutdown, Chamorro noted.

“Our entire team of member service representatives are teed up on what’s happening and all the Q&A they need to answer and where they need to direct the members for the programs that we have,” he explained.

“This is something that we’ve done in the past and we’re prepared for, and to the extent that there have been operational changes to accommodate and to prepare, I wouldn’t call it unorthodox for us,” he said.

Chamorro was hesitant to speculate about how long the shutdown could go before PedFed’s operations begin to show some wear. Ultimately, the welfare of PenFed’s members is the bigger concern, he said.

“I don’t think the emphasis should be on PenFed, to be quite frank,” he said. “I think the emphasis here is really on our members and the burden that this places on them.”

Mounia Rdaouni, associate vice president of mortgage operations for Navy Federal Credit Union in Vienna, Va., said closings have yet to be impacted by the government shutdown. The nation’s largest credit union ($95.3 billion in assets, 8.1 million members) has been able to work around issues such as the verification of employment for government employees.

“Navy Federal has made every effort to waive some requirements when possible, request alternative documents, or give members more time to provide needed documentation,” Rdaouni said.