Credit unions need flexible FHLB liquidity access
Published by: Jared Weiser
November 2, 2022 | Regulatory
Your credit union’s members are best served when federal regulations are consistent and empower flexible service in a challenging economic environment. That’s why the League recently teamed up with the Ohio Bankers League to request that the Federal Housing Finance Agency (FHFA) update the negative tangible capital rule to consistently align with other prudential federal regulators (PFRs), like the National Credit Union Administration (NCUA). Currently, Federal Home Loan Banks (FHLBs) calculate tangible capital when assessing a bank or credit union’s ability to secure accessible liquidity. Given the existing unique combination of monetary tightening and pandemic-driven composition of depository balance sheets, this inflexible rule could make it more difficult for credit unions, with positive net worth, to access FHLB liquidity. To ensure credit unions and banks have seamless access to a critical liquidity tool, FHFA should adopt an interim rule that calculates net worth through regulatory capital, like NCUA and other federal regulators.
The League will continue to engage with the FHLB to ensure credit unions can retain access to critical FHLB liquidity when it is needed.
