Central Liquidity Fund interim final rule

At the last National Credit Union Administration (NCUA) Board meeting, the NCUA Board approved an interim final ruleto update NCUA’s regulations regarding the Central Liquidity Facility (the Facility or CLF). The need for the updates grew out of the Consolidated Appropriations Act, 2021 (CAA). The CAA extended several enhancements to how the CLF operates—enhancements arising out of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The interim final rule was published in the Federal Register on March 24, and most of the rule became effective on that date. Any comments on the interim final rule are due to the NCUA on or before May 24, 2021.

The CLF is a mixed-ownership government corporation that is part of NCUA. It serves as a liquidity source for credit unions that become members of the Facility. The NCUA Board regulates how the CLF operates, including establishing rules for membership and initial borrowing privileges.

The CARES Act amended the Federal Credit Union Act to enhance credit union access to the CLF. The CARES Act amendments did several things. For example, they temporarily improved the CLF’s borrowing capacity. They eased the capital stock subscription requirement, and they created additional flexibility for corporate credit unions permitting them to access the CLF to meet their own liquidity needs. The CARES Act provisions were set to sunset December 31, 2020. NCUA published an interim final rule in April 2020 implementing some of these CARES Act requirements, although some provisions of the April 2020 interim rule were intended to have no expiration. Section 540(a)(2) of the CAA extended the application of these expiring CARES Act requirements until December 31, 2021.

 

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