ALEXANDRIA, Va. — The NCUA approved a temporary corporate credit union liquidity guarantee program that will operate from Oct. 16, 2008 through June 30, 2009.
Starting today, the NCUSIF is providing federally insured corporate credit unions with a 100% guarantee on new unsecured debt obligations, subject to terms detailed in the program.
The guarantee applies to new unsecured debt obligations issued by eligible corporate credit unions on or before June 30, 2009 and maturing on or before June 30, 2012, including promissory notes, commercial paper, interbank funding and any unsecured portion of secured debt.
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The NCUSIF will charge participating corporate credit unions a fee of 75 basis points per year on the outstanding balance of guaranteed obligations. The program is similar to the temporary liquidity guarantee program announced by the Federal Deposit Insurance Corp. Oct. 14 and is intended to provide corporate credit unions with competitive standing in the debt market.
"While this new board action is directed at addressing corporate liquidity issues, I think it is important that natural person credit unions be fully aware of all of their options in this very tight and difficult liquidity situation, including the central liquidity facility," said NCUA Chairman Michael F. Fryzel. "The standards for CLF borrowing are stringent, and our evaluation of requests will be thorough, but credit unions should know that their short-term liquidity needs can be addressed through CLF borrowings. I encourage all appropriate use of the CLF as another means to maintain liquidity and confidence in the credit union system during these uncertain times."
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