Central Liquidity Facility (2024)

FAQs

What is the CLF borrowing limit? ›

By statute, the CLF's maximum borrowing authority is limited to 12 times its subscribed capital stock and surplus per the Federal Credit Union Act (Opens new window).

The Central Liquidity Facility (CLF) 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. Member credit unions own the CLF, which exists within the NCUA.

Under the FCU Act, FCUs have the express power to borrow from any source, limited to 50% of paid-in and unimpaired capital and surplus.

§ 725.1 Scope.

This part contains the regulations implementing the National Credit Union Central Liquidity Facility Act, subchapter III of the Federal Credit Union Act.

In determining an applicant's maximum loan amount, lenders consider debt-to-income ratio, credit score, credit history, and financial profile. Government-sponsored, unsecured, and secured loans have different requirements; however, most lenders generally seek borrowers with debt-to-income ratios of 36% or less.

A borrowing limit is the amount of money that individuals could borrow from other individuals, firms, banks or governments. There are many types of borrowing limits, and a natural borrowing limit is one specific type of borrowing limit among those.

CLFs are defined in the flagship international standard for liquidity regulation: the liquidity coverage ratio. The LCR is designed to ensure that a bank would have sufficient funding resources to meet its obligations during a 30-day period of bank and market liquidity stress.

A liquidity facility should consist of any committed, undrawn back-up facility that would be used to refinance the debt obligations of a customer in situations where such a customer is unable to roll over that debt in financial markets.

Credit union loans work the same way bank loans do: You borrow money from a financial institution that you must repay, with interest, according to the terms of the loan. You'll need to join a credit union in order to qualify for a credit union loan, which may come with a lower rate and lower (or no) fees.

A federally insured credit union that experiences a reportable cyber incident must report the incident to the NCUA as soon as possible and no later than 72 hours after the credit union reasonably believes that it has experienced a reportable cyber incident.

What is the single borrower limit for NCUA? ›

The FCU's loan to one borrower limit is $2.1million. The FCU calculated the loans to one borrower amount by adding all loans per the recorded ownership of the security to determine if a group of borrowers should be considered "associated members" pursuant to NCUA's member business loan rule.

Liquidity Rule Requirement

Federally insured credit unions in this group must maintain a basic written liquidity policy. Approved by a credit union's board, the policy must provide a framework for managing liquidity and a list of contingent liquidity sources that can be employed in emergency situations.

The purpose of the Facility is to improve the general financial stability by providing member credit unions with a source of loans to meet their liquidity needs and thereby encourage savings, support consumer and mortgage lending, and provide basic financial resources to all segments of the economy.

The NCUA does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities or municipal securities, even if these investment or insurance products are sold at a federally insured credit union.

The FHLBs cap the amount of advance credit available to each member at between 20 and 60 percent of the member's total assets, with some exceptions available depending on member creditworthiness. The credit limit is typically calculated by dividing the member's total credit obligations to the FHLB by its total assets.

The Central Liquidity Facility (CLF) is a mixed ownership government corporation within the NCUA. It is an instrument of the federal government that is owned by its member credit unions and managed by the NCUA board.

The borrowing base, in essence, serves as an upper limit on how much capital lenders are willing to extend based on the collateral value. It's like your credit line but with some twists. This method safeguards lenders from overexposure while still ensuring borrowers have access to necessary funds.