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, the ease with which an asset can be sold * Accounting liquidity, the ability to meet cash obligations when due * Liqui ...

lender to

credit union A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit organization, nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including depo ...

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 a government-backed insurer of credit unions in the United States, one of two agencies that provide deposit insurance to depositors in U.S. depository institutions, the other being the Federa ...

(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 cred ...

. 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 of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...

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 A 501(c) organization is a nonprofit organization in the federal law of the United States according to Internal Revenue Code (26 U.S.C. § 501(c)) and is one of over 29 types of nonprofit organizations exempt from some federal income taxes. S ...

.Section 501(l)
. ''Internal Revenue Code''. Legal Information Institute. Cornell University Law School. Retrieved June 21, 2017.

References

{{USGovernment, archive-url=https://web.archive.org/web/20080514202022/http://www.ncua.gov/CLF/index.htm, archive-date=2008-05-14, url=http://www.ncua.gov/CLF/index.htm Bank regulation in the United States Credit unions of the United States Central banks

See also

References