Senators introduce bipartisan bill to enhance CLF flexibility

A bipartisan bill introduced this week would make COVID-era enhancements to NCUA’s Central Liquidity Facility (CLF) permanent, and it has America’s Credit Unions and league support. The CLF Enhancement Act was introduced by Sens. Alex Padilla, D-Calif., and Kevin Cramer, R-N.D.

The enhancements are designed to give small credit unions easier access to emergency liquidity through the CLF in a crisis, but they expired at the end of 2021. They increase the CLF’s maximum legal borrowing authority; permit temporary access for corporate credit unions; providing greater flexibility and affordability to agent members to join; and provide the NCUA Board with more clarity and flexibility regarding the loans it can approve.

“When in a potential crisis, access to emergency liquidity can help vulnerable credit unions and communities weather the storm. Credit unions should be able to continue service to members in need and not worry about ceasing operations,” said America’s Credit Unions President/CEO Jim Nussle. “America’s Credit Unions thanks Senators Padilla and Cramer for leading the effort to make enhancements to the Central Liquidity Facility (CLF) that provide needed flexibility and affordability to smaller credit unions who are at increased risk from economic uncertainty. This legislation will help ensure the stability of the credit union system and expand access to capital when it is needed most.”

Nussle wrote Padilla and Cramer in support of the bill Wednesday.

“The California Credit Union League thanks Senator Padilla for his leadership, and for supporting the credit union industry. Extending agent membership in the Central Liquidity Facility (CLF) is key to keeping credit unions strong,” said Scott Simpson, president/CEO of the California Credit Union League. “This flexibility is uniquely helpful to smaller credit unions which may not have the economies of scale to quickly address changing tides in the economy. The solution proposed in Senator Padilla’s bill empowers credit unions to be proactive in addressing any liquidity challenges that may arise.”

“Thousands of credit unions, especially small and mid-sized institutions, lost access to a vital emergency liquidity backstop when the temporary Central Liquidity Facility (CLF) enhancements expired at the end of 2021. We are incredibly grateful to Senator Cramer for his leadership and support in taking meaningful steps to address this critical issue,” said Jeff Olson, president/CEO of the Dakota Credit Union Association. “By joining Senator Padilla in reintroducing this important legislation, Senator Cramer is helping ensure that credit unions have the tools they need to remain stable and responsive during times of economic uncertainty. Making these reforms permanent will strengthen the entire credit union system, safeguard members' financial well-being, and ensure continued access to capital when it’s needed most. This is a forward-thinking and necessary step to protect the financial resilience of credit union members across the Dakotas and the nation.”