In a letter to Sen. Pat Toomey (R-Pa.), the National Credit Union Administration (NCUA) requested enhancements made to the central liquidity facility (CLF) by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) be made permanent.
The amendments at issue are the increased maximum for the CLF’s legal borrowing authority; the temporary access granted to corporate credit unions, as agent members, to borrow for their own needs; the greater flexibility and affordability to agent members to join and serve smaller groups of their covered institutions rather than their entire memberships; and the clarity and flexibility given to the NCUA board regarding the loans it can approve. Unless Congress acts, these changes will expire on Dec. 31, 2021.
“These 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 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.”
As evidence of the benefits provided by the CLF enhancements, joint writers NCUA Chairman Todd Harper, Vice Chairman Kyle Hauptman, and board member Rodney Hood highlighted the fact 4,107 credit unions (82 percent of all federally insured credit unions) now have access to the CLF, a huge increase from the 283 credit unions in April 2020.
“Should permanence of these provisions not be possible at this time, we request an extension of an additional year, at a minimum, for continued stability during the pandemic response,” the letter stated. “Making these enhancements permanent would bolster the long-term stability of the credit union system and ensure the safety and soundness of the national credit union share insurance fund.”