The National Credit Union Administration on Monday approved changes to an interim rule enhancing the Central Liquidity Facility, which is meant to act as a backstop for the industry.
The board unanimously approved the rule by a remote notation vote.
The CLF, a mixed-ownership government corporation, was designed to improve CUs' general financial stability by providing funding to assist with systemwide liquidity issues. The CLF is owned by credit unions and exists inside NCUA, and membership is voluntary.
The interim final rule will become effective upon publication in the Federal Register and will expire on Dec. 31. Among the changes, the new rule:
- Eliminates a six-month waiting period for new member institutions to receive loans
- Eases collateral requirements on some assets
- Permits agent members to temporarily borrow for liquidity needs
- Establishes temporary amendments regarding the waiting period for credit unions to terminate their membership.
These changes come on the heels of
“Liquidity, like capital, is a pillar of strength upon which the safety and soundness of the credit union system rest,” NCUA Chairman Rodney Hood said in a press release. “While we hope for the best outcome, we must prepare for the possibility that the Central Liquidity Facility will be a vital resource to help credit unions respond to the consequences of the COVID-19 pandemic. The NCUA encourages any credit unions that are not members to join the Central Liquidity Facility as soon as possible, either as regular members or through an agent member.”
The agency is expected to discuss the CLF further
