The credit union industry's lender of last resort has been tapped more in the past two weeks than it has since 1991.
Since Dec. 13 the central liquidity fund, which is administered by the National Credit Union Administration, has made 93 loans to 29 credit unions totaling $28.2 million, said Herb Yolles, the agency's director of risk management.
So far all of the institutions borrowing from the $672 million fund are credit unions with funds frozen at Capital Corporate Federal Credit Union, in Landam, Md., according to Mr. Yolles.
Cap Corp imposed a 60-day hold on withdrawals on Dec. 7 because it couldn't meet the liquidity demands of its members.
"The freeze itself has created a liquidity crunch," Mr. Yolles said. "The CLF is being used to cover demands which have arisen as a result of funds being frozen in different accounts with the corporate."
Rising loan demand is forcing credit unions everywhere to scrounge for liquidity. Mr. Yolles said he has received some inquiries from credit unions not affiliated with Capcorp, but no formal applications. He expects that to change.
"There is a turn in the market, and liquidity is starting to tighten," Mr. Yolles said. "I don't know when, but in the coming year I expect to see some activity by the CLF."
