Hood Asks Senate Banking Committee to Extend CLF Changes

Saying that the credit union system remains healthy but may need added liquidity, NCUA Chairman Rodney Hood asked the Senate Banking Committee Tuesday to extend the provisions of pandemic-related legislation that provided the agency’s Central Liquidity Facility with increased borrowing authority.

“While economic conditions are improving, the effects of the recent downturn will likely affect credit union performance through the end of the year and into 2021,” Hood said during a committee hearing featuring financial regulators.

The CLF changes enacted by Congress are set to expire at the end of the year. It is unclear whether the House, the Senate and the Trump Administration will agree on a new economic stimulus bill before the end of the year.

Hood said the CLF extension is needed.

“Having a reinforced CLF will also ensure the credit union system can continue to support its members and communities should the need for emergency liquidity arise,” Hood said.

Hood said the NCUA’s Share Insurance Fund remains strong. “We believe there is no need to assess a premium [on credit unions] at this time,” he said.

In his written testimony, Hood said the agency’s equity ratio stood at 1.32%. When agency officials last discussed the equity ratio, they said it stood at 1.22%. He did not address this change during Tuesday’s testimony

As has been the pattern in similar congressional hearings, many of the questions were directed toward banking regulators.

Still, Banking Committee ranking Democrat Sherrod Brown (D-Ohio) criticized Hood’s tenure at the NCUA. He told Hood that the chairman seemed intent on staging photo-ops that would help curry favor with President Trump.

Brown has been critical of Hood for praising Trump as having done more for Blacks than any president in his lifetime.

In asking for an extension of the CLF provisions of pandemic legislation, Hood said the measure relaxed the requirements on CLF agent membership, making membership more affordable for corporate credit unions.

The legislation also provided the NCUA board with “more flexibility and discretion to approve applications for CLF members that have made a reasonable effort to first utilize primary sources of funding.”

He added, “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.”