TO: NCUA Board, in its capacity as the CLF Board
FROM:
Anthony Cappetta, President
Central Liquidity Facility (CLF)
DATE: October 29, 2024
SUBJ: 2025–2026 CLF Budget
ACTION REQUESTED: Board approval of the 2025–2026 CLF Budget.
DATE ACTION REQUESTED: November 21, 2024.
OTHER OFFICES CONSULTED: Office of the Executive Director and Office of the Chief Financial Officer.
VIEWS OF OTHER OFFICES CONSULTED: Concur.
BUDGET IMPACT, IF ANY: The requested action is the proposed CLF budget of $2,307,863 for 2025 and $2,448,263 for 2026.
SUBMITTED TO INSPECTOR GENERAL FOR REVIEW: Yes.
RESPONSIBLE STAFF MEMBERS: Anthony Cappetta, President of the CLF; Timothy Dodds, Vice President of the CLF.
SUMMARY: The CLF was created by Congress in the National Credit Union Central Liquidity Facility Act.1 The CLF is an instrumentality of the United States within the NCUA owned by its member credit unions and managed by the NCUA Board, in its capacity as the CLF Board.2 The purpose of the CLF is to improve the general financial stability by providing member credit unions with a source of loans to meet their liquidity needs and thereby encourage savings, support consumer and mortgage lending, and provide basic financial resources to all segments of the economy.
Among various authorities, the NCUA Board, acting in its capacity as the CLF Board, has the authority to determine expenses and enter into obligations in operating the CLF. For example, the Federal Credit Union Act grants the NCUA Board the authority to:
- determine the expenditures incurred by the NCUA to carry out this subchapter, and the expenditures incurred by the CLF to carry out subchapters I and II of this chapter, and annually assess the CLF and the NCUA accordingly;
- appoint officers and employees to assist in carrying out this subchapter, who shall be appointed subject to the provisions of title 5;
- conduct business, carry on operations, have offices, and exercise the powers granted by this subchapter in any State or territory;
- lease, purchase, or otherwise acquire and own, hold, improve, use, or otherwise deal in and with property, real, personal, or mixed, or any interest therein, wherever situated;
- enter into contracts with any public or private organization, partnership, corporation, or individual;
- exercise such incidental powers as shall be necessary or requisite to enable it to carry out effectively the purposes for which the CLF is incorporated.3
The NCUA Board, in its capacity as the CLF Board, must approve the CLF’s budget as this authority has not been delegated to CLF staff. In years prior to 2024, the CLF’s expenditures were accounted for in the NCUA operating budget. This request for approval of the CLF budget reflects the NCUA Board’s decision to fully separate the CLF budget from the NCUA operating budget.
The CLF needs to be ready to provide support for the financial stability of member credit unions by providing liquidity for short-term, seasonal, and protracted needs. As such, the CLF budget request must consider the potential for surges in both applications for membership and the processing of liquidity advances while maintaining routine operations and audit support. In addition, the CLF needs to maintain a robust membership whose capital provides a borrowing base that can be used to provide assistance to the National Credit Union Share Insurance Fund should a system-wide liquidity event occur.
The attached 2025–2026 Budget Request represents the CLF estimated annual needs for 2025 and 2026. As shown in the summary table below, the 2025–2026 CLF budget would be $2,307,863 and 2,448,263 respectively.
| Account Description | 2025 Budget ($) | 2026 Budget ($) |
|---|---|---|
| Salaries | 1,342,716 | 1,409,852 |
| Benefits | 535,327 | 562,093 |
| Salaries (allocation of NCUA Board and Central Office) | 271,935 | 285,532 |
| PAY & BENEFIT SUBTOTAL | 2,149,978 | 2,257,477 |
| Overhead, Rent, Communications | 43,563 | 45,741 |
| Administration (Print / Supplies) | 3,762 | 3,950 |
| Contracted Services, Travel, Training | 110,560 | 141,095 |
| NONPAY SUBTOTAL | 157,885 | 190,786 |
| TOTAL EXPENSE | 2,307,863 | 2,448,263 |
RECOMMENDED ACTION: As detailed in the attached 2025–2026 CLF Budget Justification, the NCUA Board, in its capacity as the CLF Board, approve the CLF budget of $2,307,863 for 2025 and $2,448,263 for 2026.
ATTACHMENT: 2025–2026 Central Liquidity Facility Staff Draft Budget Justification.