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Home » CLF bridge loans now excluded from corp. CU lending cap
Policy & Issues

CLF bridge loans now excluded from corp. CU lending cap

September 18, 2015

ALEXANDRIA, Va. (9/18/15)--Corporate credit unions will have greater flexibility to serve consumer credit unions under a final rule approved by the National Credit Union Administration Thursday. The final rule is identical to the one first proposed by the agency in April.

CLF loans are funded by borrowings from the Federal Financing Bank. An advance from the Federal Financing Bank can take up to 10 business days, creating a lag between when the CLF loan is approved and when it is funded.

Under the new rule, corporate credit unions can make bridge loans for up to 10 business days to provide interim funding to CLF borrowers, allowing them to receive funds expeditiously. The bridge loan would be repaid to a corporate credit union when the CLF funds the member credit union’s advance.

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From left NCUA board member J. Mark McWatters, Chair Debbie Matz and Vice Chair Rick Metsger listen to agency staff explain the purpose behind the final corporate credit union bridge loan rule. (CUNA Photo)

NCUA Chair Debbie Matz called the rule a “win-win.”

“It’s a win for corporate credit unions providing a valuable service to their members and a win for consumer credit unions that can get liquidity immediately, instead of waiting up to 10 days,” she said.

According to NCUA staff, seven comments were received on the proposal, all of them in support. CUNA was one such commenter, saying the rule will make CLF loans more useful without adding additional risk to corporate credit unions and the credit union system.

 The rule will become effective 30 days its publication in the Federal Register.

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