FHLBs Tell NCUA They Can Provide Credit Unions with Emergency Liquidity

February 4, 2013 by Credit Union Times

The presidents of the 12 Federal Home Loan Banks are urging NCUA Board Chairman Debbie Matz and Member Michael Fryzel to consider the banks as an option for the regulator’s pending final emergency liquidity rule.

The proposed rule requires credit unions with more than $100 million in assets to establish emergency liquidity relationships with one of two providers: the NCUA’s Central Liquidity Facility or the Federal Reserve’s Discount Window.

“The FHLBank (sic) System has demonstrated time and again that it can and will provide liquidity to its member institutions even in times of financial emergency and distressed economic circumstances,” the bank presidents wrote in a Jan. 31 letter, which was also delivered to NCUA Executive Director Mark Treichel and Director of Examination and Insurance Larry Fazio.

“The FHLBanks played a leading role, beginning in 2007, in providing liquidity to their member financial institutions. During the fiscal crisis that began that year, the FHLBanks reliably supported their credit union members,” the letter said.

CUNA Deputy General Counsel Mary Dunn said Monday its “questionable” the NCUA Board will change its final emergency liquidity rule to include Federal Home Loan Banks.