ALEXANDRIA, Va. – Demand at NCUA’s emergency loan fund, the Central Liquidity Facility, rose to a new high this week, as the turmoil in the credit markets continued to take its toll on liquidity among credit unions.
As of Monday NCUA was in the process of funding $1.64 billion in loans from the CLF, just weeks after the federal regulator convinced Congress to increase the CLF’s funding from the previous $1.5 billion cap, all the way to 440.5 billion.
NCUA was reminding credit unions of the availability of CLF loans. "Credit unions should carefully monitor liquidity and if necessary, utilize the CLF on an as-needed basis," said NCUA Chairman Michael Fryzel.
The CLF offers three kinds of loans: short-term adjustment credits; seasonal credits; and protracted adjustment credits. The rates on each loan is based on the daily rate for loans from the Federal Finance Bank, from where the CLF borrows.
The Finance Bank, a unit of the Treasury, sets the rates daily and adds a spread of .125% for their administrative costs and contingency reserves. Presently, CLF is charging the higher of the FFB loan rate or the Federal Reserve discount window Primary Credit rate (1.75%) on all CLF advances.
