NAFCU has been the prime backer of amending the Federal Credit Union Act so that corporates can have access to the CLF.
The association wants Congress to amend the act so that the phrase "liquidity needs" refers to more than just natural person credit unions. It also wants to change the definition of "capital needs" to mean cash available to meet the needs of credit unions either to increase a credit union's net worth or capital or to "stabilize the credit union system" as determined by the NCUA Board.
The board could only approve a loan to help a credit union meet its liquidity and expressly forbids it to use the money to "expand credit union portfolios."
NAFCU said at press time that it was circulating the language among key lawmakers and staffers in the House and Senate and at the NCUA. NAFCU said expanding the use of CLF would lessen the burden on the NCUSIF.
CUNA has expressed support for the idea but said it is one of many options the group is pursuing as a means of provide alternatives to paying for the corporate rescue plan through levying a premium on the NCUSIF.
One plan CUNA has supported is asking Congress to ask the Securities and Exchange Commission to redefine accounting rules to alter the definition of "fair value" for periods when an active market for a security doesn't exist.
In a letter to Senate Banking Committee Chairman Christopher Dodd (D-Conn.), CUNA President/CEO Dan Mica said the current application of accounting rules "is eroding capital at some credit unions, and we urge Congress to step in now to prevent further declines in credit unions' net worth as a result of the impact of these rules."
He noted that a number of credit unions have "experienced serious reductions in their capital as a result of the application of fair value (mark-to-market) accounting."
NAFCU has also supported changing the accounting rules as has the American Bankers Association.