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Sens. Padilla, Cramer introduce NAFCU-backed CLF bill
Sens. Alex Padilla, D-Calif., and Kevin Cramer, R-N.D., have introduced S. 5183 that would continue Central Liquidity Facility (CLF) enhancements by allowing corporate credit unions to purchase CLF capital stock for a specific subset of members, rather than for all members, for the next five years.
“NAFCU thanks Senators Padilla and Cramer for introducing bipartisan legislation which would offer credit unions greater flexibility and ample liquidity resources, as they continue to brace economic headwinds,” stated NAFCU President and CEO Dan Berger. “We have urged lawmakers to make CLF enhancements permanent since the CARES Act and will continue to do so to allow credit unions to best serve their 134 million members.”
Both lawmakers have steadily advocated for Congress to include provisions that would make CLF enhancements permanent in the FY2023 National Defense Authorization Act (NDAA), which is still being worked on by both chambers; the final text is expected to be released this week.
“Congress created the Central Liquidity Facility in 1978 to improve the general financial stability of credit unions by serving as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls,” said Padilla. “Unfortunately, under current law, smaller credit unions often do not have access to the critical tool that could help them address liquidity shortfalls, especially amid higher interest rates.”
Of note, NCUA Chairman Todd Harper recently testified before the House and Senate highlighting the agency’s efforts to maintain the safety and soundness of the credit union industry. During his testimony, Harper reiterated to lawmakers the importance of making CLF flexibility permanent to ensure credit unions, especially smaller institutions, have access to resources for future emergencies.
NAFCU echoed similar sentiments to the Senate Banking Committee, writing that these enhancements give the NCUA a “vital tool to ensure the credit union system has access to a critical contingent liquidity source as it responds to the COVID-19 pandemic and beyond.”
Learn more about the legislation. Stay tuned to NAFCU Today for updates on this and other key pieces of credit union legislation.