CUNA encouraged House Financial Services Committee leaders Thursday to work to remove barriers preventing credit unions from fully serving their communities as the fourth phase of coronavirus disease (COVID-19) legislation comes together.

Specifically, CUNA recommended policies that will help get additional capital to small businesses and help credit unions access liquidity.

“As the economy recovers, all available small business credit needs to be deployable. Unfortunately, federal law restricts credit unions’ ability to fully deploy credit to small businesses, capping the amount any individual credit union can lend to small businesses at 12.25 percent of the credit union’s assets. This cap makes little sense during normal economic times, but at a time when every available dollar will be crucial to reviving Main Street, it makes no sense.”

CUNA supports a bipartisan bill introduced earlier this month that would exempt COVID-19 related loans made during the emergency from a credit union’s member business lending cap for three years. Thursday’s letter encourages the bill to be included in the upcoming Phase 4 COVID-19 legislation.

The letter also notes the changes made by the previous relief legislation, the CARES Act, to expand NCUA’s Central Liquidity Facility, allowing:

• Corporate credit unions to act as agents for natural person credit unions; and
• Expansion of the CLF’s borrowing authority from 12 times the capital paid in to 16 times.

These measures sunset at the end of 2020. CUNA requests that the expanded borrowing authority be extended to the end of 2021 and the corporate credit union ability to act as agents made permanent.

“The consequence of not having these provisions in place prior to this crisis is that NCUA has had to engage in a membership campaign for the CLF, asking credit unions to contribute capital to the facility at the very time credit unions are most reluctant to give up capital,” the letter reads. “Congress should take steps to ensure the long-term viability of the CLF, so that it can be prepared to help credit unions in future crises.”