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U.S. Central acts to obtain full access to Fed credit
LENEXA, Kan. (5/5/08)--U.S. Central FCU has taken all necessary action to obtain full access to Federal Reserve credit facilities, including intraday credit and the discount window, the corporate credit union announced Friday. As the nation’s only wholesale corporate credit union, U.S. Central is the central source of liquidity for the nation’s Credit Union System. Access to the Fed discount window adds the nation’s central bank--the ultimate source of backstop liquidity--to U.S. Central’s arsenal of $20 billion in market-based sources of liquidity. “With access to Federal Reserve credit, U.S. Central has further strengthened the resources available to assure that we will be in a much better position to fulfill our role as a liquidity provider to the Corporate Credit Union Network,” said Francis Lee, U.S. Central’s president/CEO. “We have always had a solid footing as a liquidity provider; now we have the Fed discount window as an added safety net as well,” Lee added. Federal Reserve policy makes the discount window available only to institutions that maintain required noninterest-bearing balances, called “reserves,” with the Fed. Because U.S. Central is a “bankers’ bank,” it previously had been exempt from the reserve requirement. However, U.S. Central opted to waive its bankers’ bank exemption from reserve requirements, and gained full access to the Fed discount window, just like most other depository institutions. The impetus for the plan was to facilitate U.S. Central’s ability to work more closely with the Fed in reducing payment system risk and improving efficiency in processing credit union payments. Recent events in the economy have underscored the benefit of having expanded sources of liquidity available to the Credit Union System. “In these turbulent market conditions, everyone in the Credit Union System should take an added measure of comfort knowing U.S. Central has all the liquidity it needs to continue to provide vital services to the Corporate Credit Union Network,” said Lee.
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