WASHINGTON—If Congress fails to enact legislation updating the Central Liquidity Facility (CLF), credit unions—particularly small and mid-sized institutions—could face heightened risk during future economic shocks, according to the Defense Credit Union Council.
DCUC Chief Advocacy Officer Jason Stverak warned that without the bill, credit unions would lack assured access to a critical liquidity backstop designed to help the system withstand crises such as pandemics, market disruptions, or sudden deposit stress. During COVID-19, Congress was forced to pass emergency legislation through the CARES Act to expand CLF access—steps Stverak said this legislation is meant to address in advance.
“You don’t build the fire department after the fire has started,” he said, emphasizing that credit unions should have liquidity tools in place before a crisis hits.
The CLF bill (S. 3575), reintroduced by Sens. Alex Padilla (D-CA) and Kevin Cramer (R-ND), would modernize and clarify access to the facility, giving credit unions greater confidence that emergency liquidity would be available if needed. Stverak said the risk of inaction is that some institutions could be forced to close or be taken over by regulators in a severe downturn, rather than relying on the CLF as a stabilizing option.
As CUToday.info previously reported, DCUC praised the bill’s bipartisan support and noted that its language had already been approved by the Senate and included in the Senate-passed National Defense Authorization Act, though it was ultimately stripped from the final NDAA. DCUC has pledged to continue working with lawmakers to advance the bill, arguing that ensuring reliable CLF access is essential to the long-term resilience of the credit-union system.