CUNA Letter to Senators Christopher Bond, Ted Stevens, Barbara Mikulski; Representative James Walsh, Alan Mollohan and Bill Young regarding Central Liquidity Facility (CLF)
April 28, 2004
On behalf of the Credit Union National Association (CUNA) and the nearly 85 million credit union members nationwide, I am writing to express my support for the $1.5 billion limit on the Central Liquidity Facility (CLF) borrowing authority sought by National Credit Union Administration (NCUA) for FY2005.
The CLF plays an important role by serving as a backup liquidity source for credit unions. Natural-person credit unions depend on a three-tiered approach to fulfill their liquidity needs. Credit unions turn first to their correspondent financial institutions, principally corporate credit unions, to withdraw deposits and to borrow additional amounts as needed. Next, if corporate credit union and other correspondent funding is unavailable, credit unions can access the CLF as a back-up liquidity provider to meet their liquidity needs. Finally, to the extent both corporate credit union and CLF funding are unavailable, credit unions may seek liquidity from the Federal Reserve System's discount window, the financial system's lender of last resort. The CLF continues to be an efficient, highly effective system that is uniquely adapted to credit union needs.
Thank you for your continued support of the Central Liquidity Facility. We look forward to working with you on this important issue.
Daniel A. Mica
President & CEO