Payments and the Government Shutdown (Oct. 7, 2013)
As the federal government shutdown drags on, the payments industry could begin to feel some impacts of the inaction, according to industry observers. And while those effects currently are relatively limited, the coming Congressional battle over the debt ceiling could have serious implications—especially for recipients of Social Security benefits via the Treasury Department’s Direct Express program.
Most banking regulators, such as the CFPB, are funded by income from entities they oversee and thus not subject to Congressional approval and remain open and working, says Terry Maher, a partner with law firm Baird Holm LLP. However, Maher tells Paybefore, “issuance of new regulations has pretty much stopped, since other agencies which have to approve issuance of new regulations, like the Office of Management and Budget, are subject to the furlough.” Maher also notes that the shutdown is making it more difficult to get access to current information on regulations, as many agencies have stopped updating or shut down their Websites.
The Federal Reserve also remains operational during the shutdown, but it’s unclear how the Fed’s pending interchange appeal court case could be affected. Federal courts will stay open, with judges still hearing cases and legal filings still being processed, but some courthouse and judicial staff could be furloughed, and courts have been encouraged to conserve as much funding as possible by deferring non-crucial expenses, according to reports. Initial arguments in the Fed’s appeal case are due to be filed with the federal appeals court in Washington, D.C., by Oct. 21.
Social Security benefits, delivered via the Direct Express MasterCard program, will continue to be paid during the shutdown, but some benefits claims and Social Security customer service functions are “either shut down or available at an impacted level,” Maher notes. However, the real danger to benefit recipients could come during the looming Congressional battle over raising the government’s debt ceiling, which could cause the Treasury Department to run short on funds to pay out benefits, Maher cautions.