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NAFCU reiterates need for long-term CLF accessibility
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's Andrew Morris reiterated the need to ensure access long term.
"The CLF is an important liquidity backstop that is uniquely responsive to the needs of credit unions," wrote Morris, NAFCU's senior counsel for research and policy. "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. He shared 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.
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."
NCUA Chairman Todd Harper last week testified before the House Financial Services Committee, which had a discussion draft of the legislation – the Central Liquidity Facility Enhancement Act – on its agenda. In his prepared testimony, Harper offered support for the legislation and NAFCU also offered its support in a letter sent ahead of the hearing.
The association will continue to work with Congress to ensure credit unions have the tools needed to provide support for their members amid the pandemic and into the future.