Leach, LaFalce asks GAO to review CLF issue

WASHINGTON - House Banking Committee Chairman Rep. Jim Leach (R-Iowa) and Rep. John LaFalce (D-N.Y.), the ranking Democrat on the House Banking Committee have written the U.S. General Accounting Office and asked it "to review the issue of the Central Liquidity Facility as a liquidity provider, with the idea of presenting its recommendations to the Congress within six weeks." In their March 9 letter, Leach and LaFalce reminded the Honorable David M. Walter, Comptroller, GAO that Congress removed the $600-million CLF cap lending for FY 2000 because of concerns over the potential liquidity needs of credit unions. "The good news is that the American financial services industry, including the credit union movement, was so well-prepared that Y2K was a non-event for the U.S. economy," they wrote. Now, however, Congress is being asked to revisit the issue of CLF lending authority in the context of the FY 2001 federal budget, they continued. It's deliberating how important CLF was to CUs' Y2K planning and how critical it would be in case of an emergency in the future - the Treasury Department called for the discontinuation of CLF in its 1997 credit union report; the Clinton Administration, in its FY2001 budget proposes returning the CLF lending cap to $600 million; CUs and NCUA want the CLF lending cap lifted or raised. "Clearly there is little Congressional sentiment for eliminating the CLF," said the congressmen. They invited the GAO to provide an in-depth accounting of CLF borrowing and lending activity. They further encouraged GAO "to seek input from the various elements that make up the credit union system."