The NCUA has been urging all credit unions to join the agency’s Central Liquidity Facility even if they do not need its assistance now to battle the impact of the coronavirus crisis.
“We encourage all credit unions, natural person and corporates alike, to consider this important opportunity to join the CLF and bolster the system’s access to liquidity,” NCUA Chairman Rodney Hood said in a letter to credit unions Thursday. “By working together, credit unions can help ensure the credit union system has access to sufficient liquidity.”
Hood said the NCUA is implementing initiatives that the board hopes will provide greater liquidity for credit unions in an effort to ensure that institutions may continue to serve members.
In recent days, the board adopted an interim final rule that eliminates the six-month waiting period for members to obtain a loan, makes temporary changes for the time period for a credit union to end its membership and allows agent members to borrow for their own liquidity on a temporary basis.
In his letter, Hood pointed out the CLF was an essential element in the NCUA’s effort during the last financial crisis.
NASCUS President/CEO Lucy Ito applauded the board’s action, saying that NASCUS has long believed that liquidity is essential to preserving the credit union system.
“Early on, we encouraged [the] NCUA to take swift action to enable the Central Liquidity Facility to meet credit union system liquidity needs as the effects of the COVID-19 pandemic unfolded,” she said.
Credit union trade groups also said they were pleased with the agency’s decision to increase the threshold for required appraisals for residential properties from $250,000 to $400,000.
“Full appraisals are a difficult service to obtain as businesses around the country comply with social distancing recommendations, so increasing the threshold is especially helpful for credit unions during this time and will help credit unions that offer mortgage lending going forward,” CUNA President/CEO Jim Nussle said.
NAFCU officials also were pleased with the threshold increase.
“As safe and sound lenders, credit unions have proven time and time again that they do not engage in the same risky lending practices as banks,” Carrie Hunt, NAFCU’s EVP of government affairs and general counsel, said. “Given credit unions’ strong history of always putting their members first, this rule will ensure they are not unfairly disadvantaged in the marketplace.”