THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, January 4, 1996 TAG: 9601040300
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY TOM SHEAN AND DALE EISMAN, STAFF WRITERS
LENGTH: Medium: 79 lines
NationsBank Corp. said it would temporarily suspend collection of its consumer loans to federal employees furloughed from their jobs.
The Charlotte-based banking company also said Wednesday that it will make emergency loans available to furloughed customers at below-market interest rates.
NationsBank, which has a major presence in Hampton Roads, said its offer to forgo collection of consumer loans will be available for 30 days to borrowers in good standing who ask for it.
If the budget impasse that prompted the layoff of federal workers is prolonged, ``we will work in partnership with our customers and continue this extension for another 30 days,'' NationsBank President Kenneth Lewis said in a statement.
Adding to the workers' troubles Wednesday, officials of the Federal Employees Education and Assistance Fund, a reserve that lets federal employees help their colleagues in need, said the fund would run out money sometime next week unless the shutdown ends.
The independent, non-partisan fund, fueled by voluntary contributions of federal workers, normally lends about $20,000 per month. But with 280,000 federal employees on unpaid furlough and 480,000 working without pay, the fund is getting applications for $12,000 in loans each day.
The fund is limiting furlough loans to $500 per worker. To assure that the money takes care of genuine needs, the fund sends it directly to creditors to pay utility bills, rents and mortgages. Employees can get up to $100 for food.
The loans will be repaid through payroll deductions from employees' paychecks when the shutdown ends.
Virginia's two senators on Wednesday joined a group of lawmakers from areas with major federal employment in urging federal workers who can afford to do so to make contributions to the fund. Sens. Robb and John W. Warner said they'll be donating a portion of their salaries to the fund for each day that the shutdown continues.
Robb and Warner joined the Senate in voting Tuesday night to end the shutdown, putting the government back in business while President Clinton and Republican congressional leaders continue negotiations on balancing the federal budget.
The fund is 10 years old, but gained prominence last year after the bombing of a federal office building in Oklahoma City. It has provided more than $100,000 in aid to more than 50 federal families there and has pledged to pay the college costs of 100 children of federal workers killed in the blast.
NationsBank, meawhile, said it would not report the past-due status of loans left uncollected under the program for furloughed federal workers. The bank also said it would waive any past-due fees.
The company did not say whether home mortgage loans and credit-card balances would be included in the program.
NationsBank advised eligible borrowers who want to participate in the program to call the customer-service telephone number on their bank statements or to call a NationsBank branch.
As part of its emergency loan program, NationsBank said it will make unsecured loans for as much as $5,000 at interest rates 2 percentage points below the current guidelines. Its normal credit standards will apply to loan applications, the company said.
These loans can take the form of a term loan for as long as 12 months or a note with a single payment in 90 days, NationsBank officials said. Customers can apply for these loans at any branch. MEMO: Furloughed employees seeking information and loan applications can
call the Federal Employment Education and Assistance Fund at
1-800-323-4140. In Hampton Roads, applications also are available at the
Norfolk office of U.S. Sen. Charles S. Robb, 107 Dominion Tower. The
phone number there is 441-3124.
The fund also accepts donations from people outside government. The
tax-deductible contributions can be sent to the FEEA Furlough Fund, 8441
W. Bowles Ave., Suite 200; Littleton, Colo. 80123-3245.
by CNB