Wednesday, April 16, 2014

A Disappointing CLF Membership Rate

The National Credit Union Administration (NCUA) is putting its best face on a disappointing Central Liquidity Facility (CLF) report.

NCUA reported that credit union membership in the CLF increased by 69 percent between March 31, 2013 and March 31, 2014 to 218 credit unions and the maximum borrowing base had increased by almost 58 percent to $3.8 billion.

In an April 11 press release NCUA Chairman Debbie Matz said: "It’s most encouraging to see the CLF performing well."

As background, NCUA is requiring all federally-insured credit unions with at least $250 million in assets to establish access to at least one contingent federal liquidity source, either the CLF or the Federal Reserve’s Discount Window, or both by March 31, 2014.

According to year-end data (the most recent available), there were 770 credit unions with at least $250 million in assets. Assuming that all 218 credit unions that are CLF members are $250 million or larger in asset size, this translates into a CLF membership participation rate of credit unions with at least $250 million or more in assets of approximately 28 percent.

However, I suspect the CLF membership rate is even lower among the credit unions with at least $250 million in assets.

Among all credit unions, the CLF membership rate is a paltry 3.33 percent.

This would explain the decision by the NCUA to increase the CLF stock dividend rate from 10 basis points to 25 basis points. A higher stock dividend rate could make CLF membership a little more attractive.

Read the press release.


  1. how many covered credit unions have federal reserve window access?

  2. According to data from Thomson Reuters, as of December 31, 2013, 357 credit unions with at least $250 million in assets have filed to borrow from the Discount Window.

  3. so lets assume that the 218 credit unions that are members of CLF are unique from the 357 credit unions that have filed for access to the discount window..probably not the case but...that would mean 575 credit unions have a recognized liquidity backstop..and 6200 do NOT?

  4. Most of them don't need it because they're small, and the NCUA doesn't require them to have one.

    1. That doesnt mean they wont NEED one. Right?
      Keith. How many credit unions have assets greater than 250m?

    2. A small credit union can't get caught in a liquidity crisis? Interesting. Something different will happen to small credit unions than larger ones if rates rise rapidly? So their members are unsophisticated and won't want to move their money for better rates?

  5. 770 credit unions as of December 31, 2013.

  6. So close to half the covered credit unions don't comply???
    Is that even possible?
    Even worse, 6200 credit unions are unprepared for a liquidity event??
    Is there a way to put Macaulay calkin's face from "home alone" on this blog???
    "While Rome burned..."
    "While England slept..."

  7. I believe that all the covered CUs will have complied with the rule. But we will be able to better tell if this is the case once the Q1 data is released.

    1. Based on the data you provide, don't know how you believe all 770 credit unions with assets greater than 250m are in compliance.
      Are you saying the remaining 300+ that are NOT in compliance will be by 1q call reports?



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