WASHINGTON-Both CUNA and NAFCU have proposed using funds from the Central Liquidity Facility to bolster the corporate credit union system.
"Our plan uses the CLF, which has existed as a borrowing facility for credit unions for decades," Becker related. "Capital was removed from the CLF after 9/11 and again this past September. Allow the CLF to allow corporates' access to liquidity and capital. It's a better and ready alternative."
While it's "ready" from the standpoint that the CLF already exists, it's not quite that simple, Keefe said. "Look, we had the same idea about the CLF, the problem is it's going to take an act of Congress to make this work," he explained, noting the aforementioned perils of getting bills through Congress that really do what you want them to do, and in a timely fashion. HR 1151, is a perfect example of a piece of legislation that had to be pushed through quickly, and the result was that a bill that was just a few sentences long grew to become a many-paged tome that also included a number of compromises CUs weren't happy with but had to accept given the timeline.
But NAFCU is holding out hope that a provision allowing such usage of the CLF could be included in the appropriations bills, which need to be passed by March 31.
A corollary to this approach, Keefe noted, is to have the Treasury Department approve loans from the Federal Financing Bank to the NCUSIF as a back-up for losses from corporates. The downside to this, however, is that thus far both Treasury and the Federal Financing Bank have been reluctant to take this action, he related.
