CHICAGO — NCUA Board Member Gigi Hyland said U.S. Central Federal Credit Union issued medium-term notes to meet liquidity demands during her keynote speech at the AICPA National Conference on Credit Unions.
Hyland was discussing the NCUA's plan to not renew the CUSIP program, saying, "The Treasury is anxious to not keep lending to us." The Treasury has been patient with the NCUA, but it is "keen to know a long-term plan for corporate stabilization," she added. Next month's proposed corporate rule changes are a step in that direction, Hyland said.
The U.S. Central notes were issued to stabilize liquidity going forward "because we know the SIP program will roll off the books," she said. The Oct. 14 bond issuance was a combination of three separate offerings for a total of $4 billion.
Charlie Felker, managing director of regulatory affairs for First Empire Securities, told Credit Union Times shortly after U.S. Central issued the debt that it did so to mask a growing liquidity problem.
Felker said he's observed withdrawal pressure within the corporate system because the wholesale credit unions are paying "submarket" rates on deposits, and many natural person credit unions "aren't willing to take another one for the team."
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