Congress should support, examine efforts to improve access to liquidity


America’s Credit Unions President/CEO Jim Nussle urged the House Financial Services Subcommittee on Financial Institutions and Monetary Policy to ensure credit unions continue to have access to liquidity via multiple channels in a letter sent ahead of the subcommittee’s hearing on the Federal Reserve’s emergency lending

In the letter, Nussle noted credit unions typically get access to liquidity through “the Federal Reserve’s (Fed) Discount Window, membership in a Federal Home Loan Bank (FHLB), and utilization of the Central Liquidity Facility (CLF).” He added that the Fed’s Discount Window and the CLF may become more important to credit unions depending on what happens as a result of the FHLB System at 100 initiative.

Nussle urged improvements both statutorily and operationally to the CLF. “Credit unions often point to the Federal Reserve’s Discount Window as an easier and quicker way to access liquidity than the CLF,” Nussle remarked. “One reason for this is that the FCU Act includes certain constraints related to the extension of credit from the CLF that are not applicable to the Fed Discount Window, such as that there must be a valid liquidity need and the credit union must be creditworthy.” 

He also explained the NCUA has five working days to approve or deny an application for CLF funds, while the Fed can provide same-day liquidity. Nussle wrote that America’s Credit Unions has asked the NCUA to shorten the five-day approval window to two days. 

In addition, he called on the subcommittee to “support and examine legislative efforts to improve the CLF”, including making previous temporary authority to expand access permanent. Read the full letter

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