WASHINGTON Federal regulators on Wednesday urged banks and other financial institutions to consider loan modification plans for borrowers affected by the government shutdown, which is now in its second week.
"Prudent workout arrangements that are consistent with safe-and-sound lending practices are generally in the long-term best interest of the financial institution, the borrower and the economy," the five agencies including the Federal Reserve Board, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., National Credit Union Administration and Office of the Comptroller of the Currency said in a joint statement.
The regulators said they were encouraging institutions to consider workouts that "increase the potential for creditworthy borrowers to meet their obligations."
"The agencies realize that the effects of the federal government shutdown on individuals should be transitory, and prudent efforts to modify terms on existing loans should not be subject to examiner criticism," the statement said.
