Appropriations

 Updated Dcember 30, 2008

Central Liquidity Facility (CLF)

Congress established the Central Liquidity Facility (CLF) in 1978 as a backup liquidity lender for credit unions.  Title III of the Federal Credit Union Act authorizes the CLF to borrow from any source, up to twelve times the subscribed capital stock and surplus of the facility.  A Congressional appropriations limitation of $600 million was established in 1981 as the amount the CLF can borrow for the purpose of making direct loans to credit unions.  That cap was removed for FY 2000 due to Y2K concerns, but was re-established in FY 2001.  In recent years, an appropriations limitation approved by Congress raised the cap to $1.5 billion.  In light of the uncertain economic times we face today, NAFCU lobbyists in conjunction with NCUA led the successful efforts to allow the CLF to lend out up to it statutorily authorized amount of approximately $41.5 billion, until March 6, 2009 as part of the continuing resolution.  This better equips credit unions with the liquidity that they need in these times, for planning and contingency purposes. 

The CLF has been crucial to making credit available in unusual and/or emergency circumstances of a longer term resulting from regional or local difficulties.  As such, NAFCU has historically recommended that no cap be set through the appropriations process, so that the CLF would be allowed to exercise its full authority under the Federal Credit Union Act.  NAFCU strongly encourages that no arbitrary appropriations cap be reinstated.

Community Development Financial Institutions Fund (CDFI)

The Community Development Financial Institutions fund (CDFI) was created by an act of Congress in 1993 to provide financial support to credit unions and other financial intermediaries chartered to assist in developing and rehabilitating economically distressed areas.  The program is housed within the Treasury Department and enjoys broad participation from many different types of financial institutions with credit unions seeking to participate in growing numbers each year.

On March 1, 2007, the Appropriations Subcommittee on Financial Services and General Government held a hearing on “Financial Services for Disadvantaged Communities.”  Witnesses included JoAnn Johnson, Chairman of the Board of the National Credit Union Administration (NCUA); Kimberly Reed, Director of the Community Development Financial Institutions (CDFI) Fund at the Department of the Treasury; and and Joy Cousminer, President and CEO of Bethex Federal Credit Union, Bronx, NY.  Following the hearing, Chairman Serrano issued a press release saying, “I have grappled with the lack of banking services in my Congressional District for years, and so have a firsthand knowledge of what these credit unions and the CDFI’s are capable of in an underprivileged area.  Ms. Cousminer’s testimony about her experiences in my Congressional District are positive proof that there is a solution to the unbanked, and it runs in part through credit unions and the support of the CDFI Fund.  Congress has an obligation to support the efforts of these entities as much as possible.”

The President’s FY2008 budget request made for the CDFI fund was $28,557,000.  In the Financial Services and General Government Act for FY2008 that passed the House on June 27, 2007 by a vote of 240-179, $100 million was included for the CDFI fund.  The Senate appropriations language proposes $90 million for the fund.  Congress passed an omnibus spending bill that funds the program at $94 million for 2008.  On September 20, 2008 a continuing resolution making appropriations through March 6, 2009 was signed by President Bush.