NASHVILLE, Tenn.–The Corporate Credit Union Alliance is urging the Senate Armed Services Committee to include language in the National Defense Authorization Act that would make permanent the temporary enhancements and improvements made to NCUA's Central Liquidity Facility (CLF) over the last three years.
“Of particular importance is the need to make permanent the existing temporary authority for corporate credit unions to serve as agent members for smaller natural person credit unions,” Jeffrey W. Merry, chairman of the Corporate Credit Union Alliance and president and CEO of Volunteer Corporate, stated in a letter to the committee, as it prepares to bring the NDAA to the floor of the Senate for a full vote.
In the letter Merry cited statements from NCUA Chairman Todd Harper that “Making these enhancements permanent would bolster the long-term stability of the credit union system and ensure the safety and soundness of the National Credit Union Share Insurance Fund,” as well as from NCUA Vice Chairman Kyle Hauptman that "... the CARES Act allowed for a corporate to join the CLF for a subset of its members. Following the CARES Act passage, the result was an increase of over $12 billion in additional reserve liquidity as corporates joined the CLF for credit unions under $250 million ... If corporates are not allowed to act as agents for a subset of their member credit unions, these credit unions will lose access to the CLF…Without agent membership, 3,600 credit unions face the threat of losing access to emergency liquidity.”
‘Speaks for Itself’
Merry said the Corporate Credit Union Alliance requests Congress include this permanent authority in the NDAA so the “current enhancements - particularly authorization for corporate credit unions to serve as ‘agent members’ for smaller natural person credit unions do not expire.
“These enhancements had merit when they were added to the CARES Act at a time when there was uncertainty regarding which way liquidity was going to go within the system,” Merry continued. “With that, the need for these enhancements certainly would speak for itself as all financial institutions are seeing liquidity tighten now. It would be extremely unfortunate for credit unions to lose access to emergency funding at a time when they could find themselves in need of it as we move forward in this much tighter liquidity environment.”
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