WASHINGTON-Plans by NCUA to use the emergency loan fund, known as the Central Liquidity Facility, as the linchpin of a long-term rescue of the credit union system will be decided by Congress, soon after lawmakers return to Capitol Hill early next year.
That's because the new funding limit, $40.5 billion for the CLF, expires at the end of March, after which the funding falls back to its previous level of $1.5 billion.
That limit has already been exceeded with NCUA loans to ailing credit unions topping $2 billion. Last week, NCUA launched two new plans that will tap the CLF, including a mortgage assistance program and an initiative to provide additional liquidity to corporate credit unions.
Under the first, dubbed the CU Housing Affordability Relief Program, NCUA will provide as much as $4 billion in low-cost loans, at 1.25%, through the CLF to credit unions, which will enable them to refinance as many as 20,000 home loans.
With the second, called CU System Investment Program, NCUA is offering 1.25% loans through the CLFs for credit unions to invest in their corporates, with the aim of providing liquidity to the corporates. The plan provides a back-door for corporates, which are barred from accessing the CLF, to tap into the emergency loan fund.
But the ultimate success for either of the plans hinges on whether Congress will agree to extend the funding for the CLF. "We're in favor of a permanent lifting of the (funding)," said Ryan Donovan, senior lobbyist for CUNA. But, he said, it will be up to NCUA to take the lead on the issue.
