Although the NCUA has said it does not consider Federal HomeLoan Banks to be appropriate sources of emergency liquidity, Director ofExamination and Insurance Larry Fazio suggested Tuesday that theregulator may have had a change of heart.
|“We do think (FHLBs) are a good source of contingency funding, acredit market source for credit unions,” Fazio said in response toa question during an NCUA webinar that also featured ConsumerFinancial Protection Bureau Director Richard Cordray.
|Fazio continued, “The issue that usually comes up is whether ornot we view them as a federal emergency liquidity backstop, andthat's one of the things we're still discussing.”
|Fazio's comment follows a Jan. 31 letter signed by all 12 FHLB presidents, urging theNCUA to include the banks as an emergency liquidity option in itsfinal rule on the subject.
|The NCUA's proposed rule requires credit unions with more than $100million in assets to establish a relationship with either theNCUA's Central Liquidity Facility or the Federal Reserve's DiscountWindow to provide emergency liquidity in a systemic liquiditycrunch.
|When introducing the proposed rule last year, the NCUA said thatFHLBs are not appropriate sources of emergency liquidity becausethey are “private institutions which are not obligated, and may notbe able, to meet emergency liquidity demands in the same way theDiscount Window and CLF are statutorily designed to do.”
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