NCUA board to Congress: Make CLF enhancements permanent

In a letter issued Monday, members of the NCUA board of directors asked Congress to make permanent the enhancements to the Central Liquidity Facility contained in the CARES Act.

The enhancements provide the NCUA “with a vital tool to ensure continued liquidity of the credit union system as it responds to the COVID-19 pandemic and beyond,” the letter signed by Chairman Todd Harper, Vice Chairman Kyle Hauptman and Boardmember Rodney Hood stated.

“Permanence would provide regulatory certainty for federally insured credit unions and bolster the credit union system’s ability to respond to any future emergencies by serving as an essential shock-absorber for credit unions and the National Credit Union Share Insurance Fund.”

The four amendments to the CLF’s provisions under the Federal Credit Union Act, which the letter notes come with no taxpayer cost, include:

  • increasing the CLF’s maximum legal borrowing authority;
  • permitting temporary access for corporate credit unions, as agent members, to borrow for their own needs;
  • providing greater flexibility and affordability to agent members to join and serve smaller groups of their covered institutions than their entire memberships; and
  • providing the NCUA board with more clarity and flexibility regarding the loans it can approve by removing the phrase, “the Board shall not approve an application for credit the intent of which is to expand credit union portfolios.”

The enhancements were extended in the Consolidated Appropriations Act of 2021 and will expire on Dec. 31, unless they are extended again. As of October 2021, 4,107 credit unions or 82% of all federally insured credit unions have access to the CLF, according to the NCUA. Before these provisions, only 283 credit unions were members of CLF as of April 2020.

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