As Prepared for Delivery on January 27, 2022
Thank you for your presentation, Anthony. And I join my board colleagues in congratulating your recent selection as President of the Central Liquidity Facility (CLF).
I support extending the CARES Act provisions related to the Central Liquidity Facility, and I have joined Chairman Harper in repeatedly calling for its extension. By the time you realize you have a liquidity problem, it may be too late to act. But the decision to extend the CARES Act provisions is ultimately up to Congress.
In general, however, I do not view the CLF’s issues as just a legislative problem. The problem is that it hasn’t made a significant loan since the financial crisis, which was now over 12 years ago.
We as an agency need to work much more cooperatively with the industry on behalf of the CLF. And that is why your position was created, Anthony. In the past, the CLF President’s duties were one of many other duties. So, your position was created as a standalone one so we can be much more collaborative with the industry.
When the CLF was created in the 1970s, credit unions were completely outside of the Federal Reserve clearing system. There was no credit union access to a lender of last resort at that time. The corporate system also wasn’t yet created. But the world has changed significantly since the creation of the CLF.
While the CLF may need to be a lender of last resort, especially during times of crisis, we need to revamp the system. We need to sit down with the corporates and credit unions to create a cooperative facility that reflects the realities of today. Mr. Chairman, in that regard, I would appreciate requiring the NCUA Board to be briefed on the status of the CLF at least once a year so we can be publicly briefed on its progress.
Anthony, I do have some final questions:
- How much did the CLF earn in its investments in 2021, and what did we pay in a dividend? Why did we only pay out a fraction of the net income?
- I am glad the Board has selected you as CLF President, Anthony, so you can focus on the Facility full-time. What ideas do you have to improve the CLF with its owners?
As you go forward in this role, I hope you will prioritize external engagement with stakeholders. I have no further questions or comments.