The partial government shutdown has gone on for more than a month, and hundreds of thousands of federal workers are on the brink of missing their second paycheck in a row as lawmakers and the White House continue their budget fight without coming to a resolution. A majority of the federal employees affected have been furloughed, but many essential workers have had to continue to work without pay. Without savings, many of those affected have had to seek financial assistance, signing up for need-based programs and visiting food banks and shelters for help with the basic necessities of life.

Thursday morning, Commerce Secretary Wilbur Ross responded to questions about the shutdown and its financial impact on workers. In an interview with CNBC, Ross argued that financial institutions should be making credit available to those whose paychecks have been held back, based on the fact that a recently passed law ensures that those federal employees will get their pay once the shutdown ends. Ross said:

I know they are [going to homeless shelters to get food] and I don't really quite understand why. ... [T]he obligations that they would undertake, say 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 against it, and we've seen a number of ads from financial institutions doing that.

Ross admitted that "the people might have to pay a little bit of interest." But overall, he didn't see the shutdown as an excuse for the personal financial crisis that many families are going through.

White House from the north, with Washington Monument in background.

Image source: Getty Images.

Why personal loans aren't the perfect answer

In an ideal world, Ross' assertions would be correct. Every federal employee would have a relationship with a financial institution that would be willing to extend no-interest or low-interest short-term credit through a personal loan without any application fees or other charges. Once the shutdown ended, the short-term loans would get paid off, and those affected would get on with their lives.

It's true that many banks and credit unions are taking steps to help their customers. Some are offering no-interest loans of the type Ross refers to, while others are making other concessions like waiving fees for breaking certificates of deposit early.

But unfortunately, in the real world, not every bank is playing by Ross' rules. Some major banks have not yet made any moves to help their customers. Others have done things like allowing customers to delay loan payments, but they haven't all agreed to stop interest from accruing.

More importantly, if you're a federal worker and don't already have a relationship with one of the banks that have agreed to help their customers, it's not always a sure thing that you'll get the help you need. It's one thing for a bank or credit union to give loans to federal workers whom they already know, but it's much different to help someone whose first action is to ask for help. Well-minded financial institutions will do what they can, but they'll still be diligent in protecting their existing members.

Avoiding big potential problems

If you're a federal worker and you go to the wrong place to get a personal loan, you can get yourself in trouble in a hurry. Many payday lenders will offer credit based on future paychecks, but they usually come with expensive application charges and other fees, along with high rates of interest. When one missed paycheck becomes two or three, those fees can snowball. Even after your checks come in, the experience can leave you owing hundreds of extra dollars in additional charges.

Moreover, not all of those affected by the government shutdown can give a financial institution the same guarantees that furloughed federal employees can about being able to pay back a loan quickly. Federal contractors are unlikely to receive back pay for the paychecks they missed during the shutdown, and so they don't share what Ross referred to as "federally guaranteed" treatment. For them, more expensive forms of credit are likely to be the only option.

The best of a bad lot

In that light, the best that many of those who've seen their paychecks disappear due to the government shutdown can do is to use whatever resources they can find to make ends meet. As painful as it is to do, visiting a food pantry or homeless shelter to get the support they need could be a better answer for struggling workers than taking personal loans from lenders that turn out not to share the same ideals that Ross seems to espouse. Absent a large financial commitment from a hedge fund investor or other deep-pocketed institution to make no-interest loans available universally, federal workers will have to go on doing the best they can until the shutdown gets resolved.

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