Although the NCUA has said it does not consider Federal Home Loan Banks to be appropriate sources of emergency liquidity, Director of Examination and Insurance Larry Fazio suggested Tuesday that the regulator may have had a change of heart.
“We do think (FHLBs) are a good source of contingency funding, a credit market source for credit unions,” Fazio said in response to a question during an NCUA webinar that also featured Consumer Financial Protection Bureau Director Richard Cordray.
Fazio continued, “The issue that usually comes up is whether or not we view them as a federal emergency liquidity backstop, and that's one of the things we're still discussing.”
Fazio's comment follows a Jan. 31 letter signed by all 12 FHLB presidents, urging the NCUA to include the banks as an emergency liquidity option in its final rule on the subject.
The NCUA's proposed rule requires credit unions with more than $100 million in assets to establish a relationship with either the NCUA's Central Liquidity Facility or the Federal Reserve's Discount Window to provide emergency liquidity in a systemic liquidity crunch.
When introducing the proposed rule last year, the NCUA said that FHLBs are not appropriate sources of emergency liquidity because they are “private institutions which are not obligated, and may not be able, to meet emergency liquidity demands in the same way the Discount Window and CLF are statutorily designed to do.”
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
