WASHINGTON—The House Financial Services Subcommittee on Financial Institutions and Monetary Policy is being urged to ensure credit unions continue to have access to liquidity via multiple channels.
The request was made by America’s Credit Unions in a letter sent ahead of the subcommittee’s hearing on the Federal Reserve’s emergency lending.
In the letter, America’s Credit Unions President/CEO Jim Nussle noted credit unions typically get access to liquidity through “the Federal Reserve’s (Fed) Discount Window, membership in a Federal Home Loan Bank (FHLB), and utilization of the Central Liquidity Facility (CLF).”
He added that the Fed’s Discount Window and the CLF may become more important to credit unions depending on what happens as a result of the FHLB System at 100 initiative.
Nussle urged improvements both statutorily and operationally to the CLF.
‘Easier & Quicker’
“Credit unions often point to the Federal Reserve’s Discount Window as an easier and quicker way to access liquidity than the CLF,” Nussle wrote. “One reason for this is that the FCU Act includes certain constraints related to the extension of credit from the CLF that are not applicable to the Fed Discount Window, such as that there must be a valid liquidity need and the credit union must be creditworthy.”
He also explained the NCUA has five working days to approve or deny an application for CLF funds, while the Fed can provide same-day liquidity. The trade group has asked the NCUA to shorten the five-day approval window to two days.
In addition, he called on the subcommittee to “support and examine legislative efforts to improve the CLF”, including making previous temporary authority to expand access permanent.
Rep Speaks Out on CUs
Separately, Rep. Seth Magaziner (D-RI) recently thanked credit unions on the House floor for playing what he called a “crucial role” for businesses and members around the country.
“Credit unions are legally owned by the people who use their services, meaning when you deposit money in a credit union, you’re not just a customer but an owner,” Magaziner said. “This makes credit unions accountable to the communities they serve. This not-for-profit cooperative structure ensures earnings are paid back to members in the forms of higher savings rate and lower loan rates, not to private investors.”
America’s CUs said Magaziner was a champion of depositing public funds at credit unions as Rhode Island’s general treasurer from 2015 to his election to Congress in 2022.
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