As Prepared for Delivery on January 27, 2022
Thank you, Mr. Chairman, and thank you, Anthony, for your update. Congratulations on being selected as the Central Liquidity Facility’s President.
Back in March, I noted that credit unions were awash in liquidity – they still are today. But we all know things can change quickly. We also know that another financial crisis isn’t an ‘if,’ it’s a ‘when’. When the next financial crisis occurs, the CLF needs to be ready.
Some of its readiness will depend upon Congress, and we will work hard to convince them of that. Other parts of the CLF’s readiness will depend upon things we, as the CLF’s board, and you, as CLF President, can do.
Corporate and credit union participation plays a direct role in the CLF’s ability to borrow. Credit unions supply the capital upon which the CLF’s borrowing capacity is determined. Greater participation means greater borrowing capacity, which we have seen can be critical in a major liquidity event. I look forward to learning more about your plans for increasing the participation of credit unions of all sizes in the CLF.
When a credit union has a liquidity crisis, time is of the essence. Time — or should I say — lack of time is what makes liquidity issues a crisis. As we know, many credit unions participate in the CLF through their corporates. This saves money and time upfront, and we are grateful to the corporate system for playing such an important role. It also makes it important that documentation and agreements are up to date. Up-to-date documentation by all parties could save days of waiting in a crisis. Conducting test loans to confirm systems — the corporate’s, the credit union’s and ours — are ready, could also save precious time.
Right now, we have the precious gift of time – something we won’t have during a crisis. The CLF can be an even more powerful tool for the protection of the credit union movement, but we must act now.
Thank you, Mr. Chairman. That concludes my remarks.