Corporates discuss CLF with authors of GAO study

WASHINGTON - Members of the Association of Corporate CUs met with authors of the General Accounting Office's study of the credit union liquidity system recently. The Central Liquidity Facility was a big talking point in the discussion. The GAO is looking into the liquidity of the industry on behalf of members of Congress who are considering permanently raising the cap on the CLF. It was raised last year to meet any potential Y2K liquidity needs, but it is set to return to its $600 million level-which many credit union leaders believe is a mistake. "The CLF was formed because of the liquidity crisis in the 1970s," said WesCorp CEO Dick Johnson, chairman of U.S. Central CU's CLF Interface Committee. "Credit unions, corporates, and U.S. Central were struggling like other financial institutions to meet liquidity needs-but unlike other institutions, we had nowhere to turn for liquidity. We never want that to happen again." Back in the `70s credit unions could not access the Federal Reserve discount window, and today about 40% of credit unions don't have access to the Fed because they don't offer checking accounts, according to CUNA. The GAO's first report, due out in May, will focus on the CLF

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