The borrowing authority for the facility designed to help credit unions meet liquidity demands, particularly due to the financial impact of the coronavirus crisis, rose to $25.8 billion by the end of May – an increase of $15.3 billion (or 143%) since April, the federal credit union regulator said Monday.
The reason behind the expansion: membership by all 11 corporate credit unions, which serve as a type of “bankers’ bank” to credit unions. The memberships mean that all of their 3,797 member credit unions have access to the National Credit Union Administration’s (NCUA) Central Liquidity Facility (CLF), the NCUA said. Essentially, that means 73% of all federally insured credit unions now have access to the CLF to help meet liquidity needs either as direct (regular) members or as members through their corporate credit unions, according to the agency.
The agency said the new memberships of all of the corporate credit unions “added $945.8 million in additional subscribed capital stock to the facility.” The agency noted that, under the temporary authority granted by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted March 27, the CLF can borrow 16 times its total capital (or now at $25.8 billion).
In addition to the membership of the corporate credit unions, 14 credit unions joined as regular members in April, NCUA said.
“The growth in the number of CLF’s members and its borrowing authority is a testament to our nation’s credit unions coming together in a time of crisis to strengthen the national system of cooperative credit,” NCUA Board Chairman Rodney E. Hood said. “The COVID-19 pandemic has caused severe economic and financial distributions, and having a reinforced CLF will ensure the credit union system can continue to support its members and communities should the need for contingent liquidity arise.”