On Thursday, CUNA sent a letter to members of the Senate Banking, Housing and Urban Affairs Committee asking for help from Congress to improve Quick Corrective Actions (PCA) and make changes to the central liquidity facility ( CLF) to help members of credit unions during the pandemic.
In a letter filed from CUNA to the committee, CUNA CEO Jim Nussle wrote: “The COVID-19 pandemic and the economic crisis that followed have impacted all aspects of society. Credit unions and their members were not immune from the consequences, but credit unions were able to continue serving their members during the crisis thanks to critical actions taken by Congress, the administration and the NCUA. “
While praising the actions taken by lawmakers and the NCUA, CUNA said one area that lacked attention was that of PCA.
“The capital requirements of credit unions are different from the requirements of banks in several respects, including the provisions of Section 1790d of the Federal Credit Union Act (FCU) that only retained earnings count as capital. Category I for credit unions and thresholds for capital levels of credit unions are hard-wired into law. Having these requirements in statutory text restricts NCUA’s ability to provide housing to otherwise healthy credit unions affected by natural disasters, pandemics and other crises, ”the letter said.
Improvements to the CLF, as part of the CARES law passed by Congress to address many pandemic-related issues, increased the multiplier from twelve to sixteen and, according to CUNA, made it easier for co-ops to join. credit to the CLF through its business loan. union. But, these changes are expected to expire at the end of 2021.
“The provisions of the CARES Act represent a recognition that existing law does not allow credit unions sufficient access to emergency cash in times of crisis. It is insufficient and could prove dangerous to allow the CLF to return to its previous level of borrowing power and its previous state of restricting access to corporate credit unions, ”the letter from the CUNA.
Therefore, CUNA called on Congress to enact permanent legislation to accomplish the following:
- Provide flexibility for the NCUA to offer forbearance from early corrective action to otherwise healthy credit unions affected by federally declared emergencies or disasters.
- Expanded borrowing authority of NCUA’s central liquidity facility, as well as other improvements provisionally enacted in 2020 by the CARES Act.