WASHINGTON—In response to the NCUA's interim final rule (IFR) to extend enhancements to the Central Liquidity Facility (CLF) made first by the CARES Act and provided by the Consolidated Appropriations Act, NAFCU has offered several recommendations it would like to see.
"The CLF is an important liquidity backstop that is uniquely responsive to the needs of credit unions," wrote Andrew Morris, NAFCU's senior counsel for research and policy in a comment letter. "Modernizing the functionality and accessibility of the CLF – particularly through increased borrowing capacity and a more flexibility capital stock subscription requirement as envisioned under the [CARES] Act – would improve the safety and soundness of the industry during times of economic uncertainty."
By making the more favorable terms of access to the CLF permanent, the industry would be better equipped to handle future liquidity shocks, Morris argued, pointing to how the CLF supported credit unions' efforts to provide forbearances, loan extensions, and more to members and business owners facing hardships amid the coronavirus pandemic.
Make Changes ‘Permanent’
As the NCUA has supported these temporary changes and noted their effectiveness, Morris called on the agency to support legislative efforts to make them permanent, "which would help ensure that the NCUA has ample authority to help credit unions the next time financial uncertainty arises."
CUNA has also filed a comment letter on the CLF.