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News Now

Washington
CUNA seeks NCUA liquidity plan comment
WASHINGTON (8/17/12)--Is the National Credit Union Administration's (NCUA) emergency liquidity proposal, released at last month's open board meeting, needed? If so, how could it be tweaked? Credit unions can answer these and other questions in a new Credit Union National Association (CUNA) comment call.

More than 6,000 natural person credit unions will lose access to the Central Liquidity Facility (CLF), which serves as a liquidity lender to credit unions in need of emergency funding, when U.S. Central Bridge Corporate CU closes in late October.

In anticipation of this closing, the NCUA has released a proposal that would require credit unions with less than $10 million in assets to maintain basic written emergency liquidity policies.

The proposal would also require federally insured credit unions (FICUs) with assets of $10 million or more to develop contingency funding plans describing how their credit union would address liquidity shortfalls in emergency situations.

FICUs with assets of $100 million or more would be required to have access to a backup federal liquidity source for emergency situations. This backup liquidity could come from CLF membership or direct borrowing from the Federal Reserve's Discount Window.

In the comment call, credit unions can address  whether the Federal Home Loan Banks should be included as sources of emergency liquidity and whether the NCUA should add other potential sources of emergency liquidity to the list of sources in its current proposal.

CUNA also asks if the NCUA's proposed asset-category divisions are appropriate, and whether different methods such as emergency liquidity ratios could be used to determine appropriate levels of liquidity preparedness.

The comment call asks if the NCUA should continue to maintain the CLF, and, if so, whether the role of the CLF could be expanded to offer non-emergency credit to credit unions.

The NCUA is accepting comments on its emergency liquidity proposal until Sept. 28. Comments should be forwarded to CUNA by Sept. 14.


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