ALEXANDRIA, Va.—By notation vote, the NCUA board has approved an interim final rule it said enhances the ability of the Central Liquidity Facility to serve as a liquidity backstop to the nation’s credit union system.
The agency said the interim final rule enhances the NCUA’s regulations on the Central Liquidity Facility to supplement the legislative changes resulting from the Coronavirus Aid, Relief, and Economic Security Act, while adding even greater flexibility and relief for member credit unions.
The rule makes it easier for credit unions to join the facility as a regular member or through a corporate credit union as part of an agent relationship, and access emergency liquidity should the need arise, NCUA added.
Specifically, NCUA said the interim final rule:
- Eliminates the six-month waiting period for a new member to receive a loan
- Makes temporary amendments to the waiting period for a credit union to terminate its membership
- Eases collateral requirements on some assets
- Allows, temporarily, for an agent member to borrow for its own liquidity needs
The interim final rule becomes effective upon publication in the Federal Register, and it will expire on Dec. 31, 2020.
“Liquidity, like capital, is a pillar of strength upon which the safety and soundness of the credit union system rest,” NCUA Chairman Rodney E. Hood said. “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 said it is encouraging 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.”
NCUA reminded that in addition to these regulatory changes, credit unions have greater access to the Central Liquidity Facility because of the Coronavirus Aid, Relief, and Economic Security Act.
NCUA said it will issue a Letter to Credit Unions with additional guidance on the regulatory and legislative changes to the Central Liquidity Facility soon.
NAFCU Response
In response to the NCUA announcement, NAFCU President and CEO Dan Berger said, “We thank NCUA Chairman Rodney Hood, and Board Members Todd Harper and J. Mark McWatters for working to allow credit unions easier access to the Central Liquidity Facility. The agency’s recent changes are a very good step forward for the industry.
“Credit unions are committed to helping their members overcome financial challenges, particularly as the coronavirus pandemic grabs hold of our economy,” Berger continued. “To this end, strong liquidity is vital to ensuring loans to struggling families and small businesses continue to flow within the credit union system.”