Credit union trade groups are joining National Credit Union Administration Chairman Todd Harper in urging Congress to make permanent the temporary changes that the House and Senate made to the agency’s Central Liquidity Facility during the pandemic.
“We believe it is important to ensure such changes are in place prior to any future stress on the industry to avoid scrambling to make such (temporary) changes during a time of crisis,” Luke Martone, the Credit Union National Association’s senior director of advocacy and counsel, wrote in a letter to the NCUA in support of Harper’s effort.
“The CLF is an important liquidity backstop that is uniquely responsive to the needs of credit unions,” said Andrew Morris, senior counsel for research and policy at the National Association of Federally-Insured Credit Unions.
Federal stimulus legislation enacted in response to the coronavirus crisis expanded the borrowing authority of the CLF from 12 times the paid-in capital to 16 times the paid-in capital. That provision has been extended once already, but Harper and the trade groups want it made permanent.
Legislation making those changes permanent was included in draft legislation listed by the Democrats on the House Financial Services committee last week.
In testimony before the Financial Services Committee last week, Harper said that the number of consumer credit unions that are members of the CLF reached 349 at the end of April, up from 283 in April, 2020. He said that 81% of all federally insured credit unions have access to the CLF, either as a regular member or through membership in a corporate credit union.
Harper told the committee that as of the end of April, the facility’s borrowing authority was $36.1 billion, an increase of $25.6 billion since a year ago.
“It is important that these temporary enhancements to the CLF are made permanent,” Harper said, in written testimony. “We know from experience that any time there are economic contractions, we can expect credit unions’ liquidity needs to rise.” He added that those liquidity needs may spike after the current expiration date of the legislation.