The Central Liquidity Facility (CLF) is a mixed-ownership United States (U.S.) government corporation created to improve the general financial stability of credit unions by serving as a
liquidity
Liquidity is a concept in economics involving the convertibility of assets and obligations. It can include:
* Market liquidity
In business, economics or investment, market liquidity is a market's feature whereby an individual or firm can quic ...
lender to
credit union
A credit union is a member-owned nonprofit organization, nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (che ...
s experiencing unusual or unexpected liquidity shortfalls. Member credit unions own the CLF which exists within the
National Credit Union Administration
The National Credit Union Administration (NCUA) is an American government-backed insurer of Credit unions in the United States, credit unions in the United States, one of two agencies that provide deposit insurance to depositors in U.S. deposi ...
(NCUA). The President of the CLF manages the facility under the oversight of the NCUA Board.
The Central Liquidity Facility was created by the U.S. Congress in 1998 with the National Credit Union Central Liquidity Facility Act, Subchapter III of the
Federal Credit Union Act
The Federal Credit Union Act is an Act of Congress enacted in 1934. The purpose of the law was to make credit available and promote thrift through a national system of nonprofit, cooperative credit unions. This Act established the federal Credit ...
. The primary purpose of the CLF is to provide loans to credit unions to meet short or long term liquidity needs. It performs the same general functions for credit unions that the
Federal Reserve System
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...
performs for member banks.
The Central Liquidity Facility is backed by the credit of the U.S. government. The CLF may borrow up to 12 times its subscribed capital stock and surplus (12 USC 1795f(a)(4)(A)).
CLF is organized into five regional branches to serve different states. To become a member, credit unions purchase stock in the Central Liquidity Facility, at an amount equal to 1/2 of 1% of an average of six months of their unimpaired capital and surplus or $50 (whichever is greater).
The Central Liquidity Facility is a
501(c)(1) organization.
Section 501(l)
. ''Internal Revenue Code''. Legal Information Institute. Cornell University Law School. Retrieved June 21, 2017.
See also
* Credit unions
A credit union is a member-owned nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts ( cheque accounts), credit ...
* Corporate credit union
A corporate credit union, also known as a central credit union, provides services to natural person (consumer) credit unions. In the credit union industry, they are sometimes referred to as "the credit union’s credit union". In the United States ...
* National Credit Union Administration
The National Credit Union Administration (NCUA) is an American government-backed insurer of Credit unions in the United States, credit unions in the United States, one of two agencies that provide deposit insurance to depositors in U.S. deposi ...
* US Central Credit Union
References
External links
*{{official, https://ncua.gov/support-services/central-liquidity-facility
Bank regulation in the United States
Credit unions of the United States
Central banks