ALEXANDRIA, Va. – The NCUA Board last week made several proposals aimed at kick-starting the agency’s Community Development Revolving Loan Fund, which hasn’t made a loan in more than a year and, as a result, is sitting on almost $15 million of cash.
The proposals would expand the number of credit unions eligible for the funds from the current 1,500; allow NCUA to charge interest of less than the current 1%; award loans greater than the $300,000 limit and use the unexpended funds for emergency lending to eligible credit unions.
The proposal, according to NCUA Chairman Debbie Matz, is aimed at increasing lending by the fund and expanding assistance to low-income credit unions.
The community development fund was created in 1979 with an initial appropriation of $6 million but due to assiduous lobbying by NCUA and credit unions has grown to almost $20 million and is used to fund both long-term liquidity needs and short-term funding for smaller needs through its grant program. But the low-interest rate environment combined with slack loan demand as dried up demand for the loans, leaving the NCUA fund with the large cash horde.
The proposal has been issued for a 60-day public comment period.
