WASHINGTON (6/12/15)--CUNA expressed its support of the National Credit Union Administration’s (NCUA) proposed amendment that would exclude Central Liquidity Facility (CLF)-related bridge loans made by a corporate credit union to a natural-person credit union from the corporate’s aggregate unsecured lending cap.
In a letter Thursday to the NCUA, CUNA commented on the agency’s second notice of the proposed corporate credit union rulemaking. The NCUA is required by the Administrative Procedures Act to issue a rule adopting the additional amendments, which are in response to public comments that went beyond the scope of the agency’s 2014 proposed corporate credit union rule.
“The agency’s willingness to consider suggestions beyond the scope of the original proposal demonstrates that NCUA seriously considers public comments and is willing to work with the industry,” said Lance Noggle, CUNA senior director of advocacy and counsel, in the letter to NCUA Board Secretary Gerard Poliquin.
The proposal’s exclusion would apply only to a CLF-related bridge loan made to a natural-person credit union that has been approved for a CLF loan but has not yet received that funding. The proposal would also remove CLF-related bridge loans from the calculation of “net assets” and “net risk-weighted assets” for determining minimum capital requirements.
“These amendments should make it easier for corporate credit unions to supply immediate liquidity to natural-person credit unions through CLF-related bridge loans,” CUNA said. “The CLF funds its loans from the U.S. Treasury Department, which can take up to 10 days to fund after receiving a request from the CLF. This delay from approval to funding could create a hardship when a credit union is experiencing liquidity problems."
In noting its support for the amendments, CUNA said that “they will make CLF loans more useful without adding any additional risk to corporate credit unions or the credit union system.” The loans “make it easier for credit unions to use the CLF by providing them with an immediate source of funds while awaiting funding of a CLF loan,” the letter concluded.