As Prepared for Delivery on April 8, 2020
Good morning, everyone. Thank you for joining us on today’s call.
I want to begin by extending my appreciation to you for your engagement and support of the NCUA’s efforts to bolster access to- and delivery of- contingent liquidity to the nation’s credit unions through the Central Liquidity Facility (or “CLF”) during the COVID-19 crisis.
The recently signed CARES Act provides vital economic support and regulatory relief, and will ensure that credit unions play a critical role in the economic recovery following the coronavirus outbreak.
More importantly, the Act provides the NCUA’s Board with the power to expand access to, and increase the borrowing authority for, the CLF. This will enhance its role as a liquidity backstop for the credit union system.
As we have partnered in the past for events such as Y2K and the last financial crisis, the NCUA and corporate credit unions have a strong history of coordinating efforts to make the CLF a highly effective and critical component of the system’s contingency response capability.
I worked with Congress to craft statutory relief into the CARES Act, but now it is time to put those measures to work.
While these statutory changes are currently temporary in nature, I believe we should capitalize on this opportunity we have to demonstrate how the credit union system can be instrumental in times of crisis to facilitate real solutions.
The CLF is a unique public-private mixed-ownership entity, and it can only be effective when membership is sufficiently large to create the critical mass of capital amounts we need to achieve sizable borrowing authority.
By constituting an agent network and making the CLF more robust, we have the chance to allow thousands of smaller credit unions this unique form of liquidity insurance.
Liquidity, like capital, is a pillar of strength upon which the safety and soundness of the credit union system rests. The CLF is a proven solution for individual credit unions and to help stabilize liquidity throughout the credit union community.
Together, credit unions can help ensure the credit union system has access to sufficient liquidity.
The NCUA has confidence that the credit union system will remain safe and sound. These measures are intended to be proactive efforts to ensure sufficient liquidity is available until the extent of the COVID-19 impact on credit unions has been fully determined.
By working together in the cooperative spirit on which you were founded, the credit union community can assist one another in protecting the credit union system through membership in the CLF.
I know that you all have significant relationships with your member institutions. Many of them will seek your counsel and advice on how to navigate through this crisis. These relationships will be an important element in supporting our efforts to help natural-person credit unions process and hopefully embrace the reasons why being part of the CLF membership is good for them and good for the system as a whole.
We also know that you will influence and advise your member institutions on their liquidity planning and funding strategies over these next few months. It is very fortifying for our liquidity and contingency funding principles to have you there to explain how the CLF operates.
Again, I appreciate your role during this challenging time.
We still have a lot of work to do. However, I am confident the NCUA staff will continue to work tirelessly with you to create an effective agent network in the weeks and months ahead.
While we are still in the middle of this crisis, we know it will ultimately come to an end. And when it does end, we will face a new set of challenges in terms of what’s needed for economic recovery. We will rise to meet those challenges, as well, and my great hope is that all of your institutions will emerge stronger.
Thank you again for your time today and for your commitment to our nation’s credit unions.