House Panel Recommends $40 Billion for CLF Borrowing
A House subcommittee today recommended that the Central Liquidity Facility have about $40 billion in borrowing authority and not be subject to a cap.
The House Appropriations Subcommittee on Financial Services recommended the action to the full committee as part of the process by which Congress establishes funding for the government. Once the full committee takes action, the House will consider it and then it will go to the Senate.
"Today's subcommittee action suggests that Congress will continue to support NCUA's authority regarding Central Liquidity Facility borrowing," said NCUA Chairman Michael E. Fryzel. "I am optimistic that the cap will be removed for the second consecutive fiscal year and that Congress will provide NCUA with the necessary tools to maintain liquidity in the credit union system."
Last year, Congress lifted the artificial cap on the CLF's lending capabilities. It had been capped at $1.5 billion (as it has been since 2001) and the change would allow the facility to lend money to credit unions based on the formula established in the Federal Credit Union Act, which is estimated to be about $40 billion.
NAFCU President Fred Becker wrote the panel that the continued removal of the cap "will instill an important measure of confidence in the credit union industry. The CLF has been an effective tool in the past in providing crucial liquidity in emergency situations and has helped to maintain a comparatively unrivaled stability and confidence in the credit union system.''
The subcommittee also approved a $1 million appropriation for the NCUA's Community Development Revolving Loan Fund.