(Dec. 3, 2021) Congress should make permanent temporary enhancements to the fund that backs up credit union liquidity, which were made in response to the coronavirus crisis, the three members of the NCUA Board wrote this week.
However, if the changes cannot be made permanent, the board members allowed, Congress should consider at least a one-year extension.
The joint letter to Congress, signed by all three members of the NCUA Board, asked that the enhancements to the agency’s Central Liquidity Fund (CLF) be made permanent. The temporary changes were made via the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) of 2020.
Although those changes have been extended once already – in the Consolidated Appropriations Act of 2021 (which became effective in December 2020) – the changes are scheduled to expire on Dec. 31, according to the NCUA Board members’ letter. The letter indicated that by not making the changes permanent, thousands of credit unions could lose access to the liquidity facility. (The CLF, owned by credit unions and managed by NCUA, is a back-up source of liquidity for credit unions, like the way the Federal Reserve’s discount window provides access to loans for eligible banks and other financial institutions.)
As of October 2021, 4,107 credit unions or 82% of all federally insured credit unions have access to the CLF, up from 283 as of April 2020, the letter states. “The growth in the number of CLF members is a testament to our nation’s credit unions coming together in a time of crisis to strengthen the national system of cooperative credit.”