By: Timothy A. Raty, Sr. Regulatory Compliance Specialist
Date: March 26, 2020
“No technological computation and calculation would
be possible in an environment that would not employ a
generally used medium of exchange, money.”
(Ludwig von Mises, The Ultimate Foundation of Economic Science, p. 127)
On March 19, 2020 the U.S. Department of Homeland Security (through their Cybersecurity & Infrastructure Security Agency or “CISA”), issued a “Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response” for the purpose of providing “strategic guidance, promote a national unity of effort, and coordinate the overall federal effort to ensure the security and resilience of the Nation’s critical infrastructure” during the national emergency which has been imposed due to COVID-19 (aka “the coronavirus”).
In this “Memorandum”, CISA provides a list of “Essential Critical Infrastructure Workers” for the purpose of helping (“this list is advisory in nature”) State, local, tribal, and territorial governments decide which businesses may stay open and which employees may travel to and from work, when such governments impose “stay-at-home” emergency orders (aka “lockdowns”). Fourteen categories of “essential workers” are listed, including the following:
- Workers who are needed to process and maintain systems for processing financial transactions and services (g., payment, clearing, and settlement; wholesale funding; insurance services; and capital markets activities)
- Workers who are needed to provide consumer access to banking and lending services, including ATMs, and to move currency and payments (g., armored cash carriers)
- Workers who support financial operations, such as those staffing data and security operations centers”
This corresponds with CISA’s “Critical Structure Sectors” description of “Financial Services Sector”, which is as follows:
“The Financial Services Sector includes thousands of depository institutions, providers of investment products, insurance companies, other credit and financing organizations, and the providers of the critical financial utilities and services that support these functions. Financial institutions vary widely in size and presence, ranging from some of the world’s largest global companies with thousands of employees and many billions of dollars in assets, to community banks and credit unions with a small number of employees serving individual communities. Whether an individual savings account, financial derivatives, credit extended to a large organization, or investments made to a foreign country, these products allow customers to:
- Deposit funds and make payments to other parties
- Provide credit and liquidity to customers
- Invest funds for both long and short periods
- Transfer financial risks between customers[.]”
As governments rapidly issue “lockdowns”, a crucial question for those in the mortgage industry is whether their business (in whole or in part) is required to be temporarily closed. According to Docutech’s research, most states which have (so far) issued “lockdowns” have deferred to CISA’s descriptions of “essential” and “critical” businesses and workers in determining which businesses should be allowed to stay open. CISA’s descriptions are broad enough that they would encompass most financial services, but debates still exist as to the extent these descriptions apply to third party service providers in the mortgage industry (e.g., see HousingWire’s article entitled “Are notaries considered essential businesses?”).
In addition, not all “lockdowns” defer to CISA’s various guides; some States have created their own list of “essential” businesses and workers which can be interpreted more broadly or narrowly than CISA’s list. States which have created their own lists include the following:
While each of these State’s lists refer to “financial services” as being “essential”, the descriptions of such differ. For example, Washington’s description is even broader than CISA’s and comprises over half a page. Delaware, on the other hand, does not provide “descriptions” (per se) as much as a laundry list of industry groups, two of which (“Lessors of Real Estate” and “Offices of Real Estate Agents and Brokers”) are required to be closed. Whether a business fits into these industry groups or not is open to conjecture.
While it is important for members of the mortgage industry to be cognizant of these “lockdowns” and to what extents they apply to both them and other members of the industry with whom they do business, it is also crucial to be cognizant of the fact that the financial sector does provide an essential service. It is the middleman through which money and credit is transacted among and between individuals and businesses.
Money is a crucial part of civilization; it provides a medium of exchange between each person’s productive work. During an epidemic like the current one, it is vital that people’s productive work continues to be exchanged, whether it is the production of food and medical supplies, development of medicines and vaccines, or the acquisition and retainment of suitable housing. For the mortgage industry, it means providing capital to borrowers to improve their livelihoods, in exchange for a return on the investments that such improvements create (e.g., increased equity in the real estate which can leads to more investments, increased production by the borrower as a result of having a better standard of living, etc.).
Docutech understands the value of other members in the financial services sector, especially our clients and partners. We not only wish them the best in weathering this pandemic, but will continue to work with them in providing value to their clients, because we recognize that this business sector, and the hardworking women and men in it, are all an essential, critical infrastructure workforce.