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CUNA Regulatory Comment Call

October 23, 2000

EXECUTIVE SUMMARY

• The NCUA Board has issued an Interpretive Ruling and Policy Statement (IRPS) to clarify the circumstances under which credit unions may borrow from the Central Liquidity Facility (CLF).
• The proposal states that credit unions may borrow from the CLF under three circumstances. A credit union may seek a short-term adjustment credit advance for up to 90 days to assist with a temporary need for credit or a seasonal credit advance for up to 270 days to assist with an expected seasonal demand for credit. To obtain seasonal credit, however, credit unions must show a pattern of recurring need that is supported by two years of data. A credit union may seek a protracted adjustment credit advance for longer than 270 days under exceptional circumstances that are outside of the credit union's control. When extending protracted adjustment credit, CLF loan officers may exercise considerable discretion and may consult with NCUA regarding the viability of the credit union. For all of these loan types, the CLF may decline a credit union's request based on an assessment of its creditworthiness.
• The policy specifically states that a credit union may not borrow from the CLF to obtain a more advantageous loan rate; to substitute CLF credit for other short-term, interest-sensitive shares; or to support an expansion of its portfolio or product lines.

Comments will be due January 23, 2001. Please submit your comments to CUNA by January 10, 2001. Please feel free to fax your responses to CUNA at 202-371-8240; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.com or to Assistant General Counsel Michelle Profit at mprofit@cuna.com; or mail them to Mary or Michelle c/o CUNA's Regulatory Advocacy Department, 805 15th Street, NW, Suite 300, Washington, DC 20005. Please contact us if you need more information. You may also contact us if you would like a copy of the proposed rule.

• Should the IRPS remain the same?
  
  

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• Should the policies for extending short-term, seasonal or protracted credit be made more liberal? If so, please clarify.
  
  

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• Other comments?
  
  

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