SFA Member Alert: Federal Shutdown Begins – What SFA Members Need to Know

Federal Shutdown Begins – What SFA Members Need to Know

Dear SFA Members,

As you have no doubt seen, the U.S. federal government officially shut down at 12:01 a.m. today. Early indications suggest this shutdown could be prolonged. The Structured Finance Association is closely monitoring developments and remains committed to keeping you informed. Below is a summary of key issues we are tracking and how they may affect our industry.

Each year, Congress must pass spending measures known as appropriations bills to fund the operations of the U.S. government through the end of the next fiscal year, which is September 30th. Should Congress not be able to agree upon yearlong appropriations, a stopgap spending measure known as a Continuing Resolution ("CR") can be passed to continue funding the government at current levels to a date in the future to buy time for a funding deal to be reached. CRs can be short-term (days or weeks) or long-term to provide certainty through the end of the fiscal year. Government funding, an important though basic function of the legislative branch, can include thorny political measures which take time to negotiate, and our government had been operating on a series of CRs through yesterday.

Two weeks ago, on September 19, the House of Representatives passed a "clean" CR, lacking political funding riders, through November 21. On Tuesday, the Senate then voted on the House-passed CR, and it failed by a vote of 55-45. Although 52 Republicans, two Democrats and one Independent (who caucuses with Democrats) voted in favor of the measure, 60 votes are required to pass such a bill in the Senate.

Since Congress failed to pass a funding bill, as of this morning the entire federal government shut down for the first time since 2013. The last shutdown, in late 2018, lasted for more than 30 days but was merely a partial shutdown due to some appropriations measures that had been passed, including those for Defense, HHS, Labor, Legislative, Social Security and other agencies. We do not know how long this shutdown will last (educated predictions range from days to months), what the catalysts for getting out of the shutdown will be, or the depth of impact to government employees.

Agencies have prepared contingency plans (linked below) and the Office of Management and Budget ("OMB") will soon make determinations on which portions of government employees are "essential," which will then require that subset of employees to continue working in their roles without pay until such time as an agreement can be reached on Capitol Hill. Other non-essential employees will be furloughed or possibly see their jobs cut entirely through a reduction-in-force plan, as has been reported widely in the media. According to an estimate from the Congressional Budget Office, approximately 750,000 government employees would be furloughed under a shutdown, which would lock up ~$400 million in compensation daily for those affected employees.

Some agencies will be affected more than others, and the pace of progress on certain issues will slow. At present, analysts believe that Congress will continue to hold hearings as planned (though that may change) and nearly all legislative attention will be on re-starting the government.  

Some key agencies we are watching include the following:

• SEC: The Securities and Exchange Commission will reduce its staff to 9% of current total employees during the shutdown. As such, it can be expected that project work will slow during the shutdown. Work products to be delivered to the SEC (and other agencies) should continue apace from the private sector during this time. For example, the SEC issued a timely concept release last Friday on public offerings of RMBS (which includes Regulation AB II), and that effort was entered into the Federal Register on Monday. Interested parties, including SFA, will have 60 days from Monday within which to provide comment on this effort. That deadline should not be expected to change, and comments should be delivered by December 1, 2025. 
  • NOTE: SFA has already begun work on this concept release. If you are interested in joining the Regulation AB II Task Force, please email [email protected].
    
    
• HUD: In their contingency plan, the Department of Housing and Urban Development notes that "(m)uch of HUD’s activities supporting FHA’s portfolio of insured mortgages, as well as Ginnie Mae’s work within the secondary mortgage market, which are vital to the stability and liquidity of the national economy will continue during a lapse". 
  
  
• The Fed: The Federal Reserve, which operates on a budget separate from Congressional appropriations will largely be unaffected.    

We are actively seeking information about any expected slowing of work on key cross-agency work products such as the Basel III Endgame and other items.  

A list of publicly available contingency plans are available below:

• Department of State (DOS): DOS-Lapse-Guidance-updated-29-September-2025.pdf
• Department of the Treasury/IRS: Treasury_IRS_Lapse_Plan.pdf
• Department of Defense (DOD): Contingency Plan Guidance for Continuation of Operations in the Absence of Appropriations
• Department of Justice (DOJ): U.S. Department of Justice FY 2026 Contingency Plan
• Department of the Interior (DOI): Bureau of Reclamation Contingency Plan
• Department of Agriculture (USDA)
• Department of Commerce: DOC Contingency Plan
• Department of Labor (DOL): dol-contingency-plan.pdf
• Department of Health and Human Services (HHS): FY 2026 HHS Contingency Staffing Plan | HHS.gov
• Department of Housing and Urban Development (HUD): HUD Contingency Plan for Possible Lapse in Appropriations 2025
• Department of Transportation (DOT)
• Department of Energy (DOE)
• Department of Education (ED): us-department-of-education-contingency-plan-lapse-fiscal-year-fy-2026-appropriations-112431.pdf
• Department of Veterans Affairs (VA): Human Capital Contingency Plan - VA Contingency Planning
• Department of Homeland Security (DHS): DHS Procedures Related to a Lapse in Appropriations (Updated September 2025)
• FDA: Food and Drug Administration | HHS.gov
• FTC: Shutdown of Federal Trade Commission Operations Upon Failure of the Congress to Enact Appropriations
• NASA: NASA Guidance - NASA
• SEC: SEC Operations Plan
• U.S. Federal Housing (FHFA)

If you have any questions, please do not hesitate to contact Daniel Grattan, SFA’s Global Head of Advocacy.

NOTE: Agencies in italics have not released a contingency plan at time of writing