Cornerstone League
COVID-19 Resources

Central Liquidity Facility: Enhanced Access for Credit Unions

The Central Liquidity Facility (CLF), which exists within the NCUA, is a mixed-ownership government corporation created to improve the general financial stability of credit unions by serving as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020, brings important changes to the CLF. It made four amendments to Subchapter III of the Federal Credit Union Act, all of which sunset, or expire, on Dec. 31, 2020. These amendments:

  • Considerably increased the CLF’s borrowing capacity. Before the CARES Act was enacted into law, the CLF had the authority to borrow, provided its obligations do not exceed 12 times the subscribed capital stock and surplus of the CLF (that is, the sum of its retained earnings and capital stock). The CARES Act temporarily increases the multiplier from 12 to 16, meaning that for every $1 of capital and surplus, the CLF can now borrow $16. Since a credit union that joins the CLF pays only half of the capital stock subscription amount, the CLF can now borrow $32 for each new dollar paid in.
  • Temporarily relaxed the requirements on agent membership, making such membership more affordable for corporate credit unions. An agent member is no longer required to buy capital stock for all of its member credit unions but may buy CLF capital stock for a chosen subset of the credit unions it serves. The NCUA encourages corporate credit unions to consider agent membership as a way to support the liquidity needs of the credit union system.
  • Changed the definition of “liquidity needs” to include the needs of any credit union, not only natural-person credit unions. This new definition broadens access by allowing the CLF to meet the liquidity needs of corporate credit unions.
  • Provide more clarity about the purposes for which the NCUA Board can approve liquidity-need requests by removing the phrase “the Board shall not approve an application for credit, the intent of which is to expand credit union portfolios.” The NCUA Board now has more flexibility and discretion to approve applications for CLF members that have made a reasonable effort to first utilize primary sources of funding. This change increases the transparency and efficiency of the loan-approval process by removing doubt about whether a credit union’s portfolio may expand if it borrows from the CLF to meet liquidity needs.

The NCUA Board approved an interim final rule to make additional enhancements to the NCUA’s CLF rule, Part 725. Besides the legislative changes, these enhancements add more flexibility and relief for credit unions. It will be easier to join the CLF and access liquidity if the need arises as a regular member or through your corporate credit union as part of an agent relationship.

The NCUA’s regulatory changes include the following permanent and temporary relief measures:

  • Permanently eliminates the six-month waiting period for a new member to receive a loan. Under the new rule, new regular and agent members can borrow as soon as they complete the new member documents and pay the required capital stock amount.
  • Temporarily amends the waiting period for a credit union to terminate its CLF membership. Previously, a CLF member could terminate its membership only after six to 24 months, based on the size of the credit union’s stock subscription in the CLF. A credit union that requests withdrawal of its CLF membership in writing between publication of the interim final rule and Dec. 31, 2020, will wait no longer than six months for that withdrawal to take effect. Any credit union that retains CLF membership after Dec. 31, 2020, may immediately terminate its membership before Dec. 31, 2021, after providing written notice to the NCUA Board. After Dec. 31, 2021, the temporary termination provisions will expire, and a credit union could terminate its membership after six or 24 months, based on the size of its stock subscription in the CLF. This provision applies to existing members and credit unions that become members before Dec. 31, 2020.
  • Permanently eases collateral requirements. The prior §725.19 required each CLF loan and each agent loan be secured by a first-priority security interest in collateral of the credit union with a net book value at least equal to 110% of all amounts due under the applicable loan or by guarantee of the Share Insurance Fund. Under the new rule, the amount of collateral will be determined from the CLF’s collateral margins table, published on the NCUA’s website. The required collateral percentages vary based on different types of assets and, in some cases, less than 110% will be required. This change eases the collateral requirements, allowing a greater amount of borrowing overall.
  • Temporarily permits an agent member to borrow for its own liquidity needs. Previously, the CLF could only meet the liquidity needs of natural-person credit unions. The interim final rule includes several provisions that align with the CARES Act change that allows an agent member to borrow from the CLF for its own liquidity needs. Specifically, the amendments clarify that an agent member may borrow from the CLF for its own liquidity needs after subscribing to the capital stock of the CLF in an amount equal to one-half of 1% of the agent’s own paid-in and unimpaired capital and surplus. Expanding the liquidity resources of corporate credit unions, even temporarily, is an added measure of liquidity strength for the system as a whole. A loan to an agent for its own needs would be subject to the same creditworthiness and liquidity-need criteria as for all other member loans.

Joining the CLF is voluntary, and the NCUA encourages any credit unions that are not members to join as soon as possible, either as regular members or through an agent member. Membership is affordable and relatively easy. A credit union may become a CLF member by completing a membership application and contributing one-half of its stock subscription requirement, which equates to approximately one-fourth of 1% (0.0025 percent) of a credit union’s assets.

Visit the CLF webpage for more information on becoming a member. If you have questions about the changes described herein or about CLF membership, please contact the CLF at