SUBCHAPTER III—CENTRAL LIQUIDITY FACILITY
§1795. Congressional findings
The Congress finds that the establishment of a National Credit Union Central Liquidity Facility is needed to improve general financial stability by meeting the liquidity needs of credit unions and thereby encourage savings, support consumer and mortgage lending, and provide basic financial resources to all segments of the economy.
(June 26, 1934, ch. 750, title III, formerly subch. III, §301, as added
Editorial Notes
Codification
Section 309(b)(1) of
Statutory Notes and Related Subsidiaries
Effective Date
Short Title
For short title of title XVIII of
§1795a. Definitions
As used in this subchapter, the term—
(1) "liquidity needs" means the needs of credit unions primarily serving natural persons for—
(A) short-term adjustment credit available to assist in meeting temporary requirements for funds or to cushion more persistent outflows of funds pending an orderly adjustment of credit union assets and liabilities;
(B) seasonal credit available for longer periods to assist in meeting seasonal needs for funds arising from a combination of expected patterns of movement in share and deposit accounts and loans; and
(C) protracted adjustment credit available in the event of unusual or emergency circumstances of a longer term nature resulting from national, regional or local difficulties.1
(2) "Central Liquidity Facility" or "Facility" means the National Credit Union Central Liquidity Facility;
(3) "paid-in and unimpaired capital and surplus" means the balance of the paid-in share accounts and deposits as of a given date, less any loss that may have been incurred for which there is no reserve or which has not been charged against undivided earnings, plus the credit balance (or less the debit balance) of the undivided earnings account as of a given date, after all losses have been provided for and net earnings or net losses have been added thereto or deducted therefrom. Reserves shall not be considered as part of surplus,2 and
(4) "member" means a Regular or an Agent member of the Facility.
(June 26, 1934, ch. 750, title III, formerly subch. III, §302, as added
Editorial Notes
Codification
Section 309(b)(1) of
Amendments
2020—Par. (1).
1980—
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Effective Date
Section effective Oct. 1, 1979, see section 1806 of
1 So in original. The period probably should be a semicolon.
2 So in original. The comma probably should be a semicolon.
§1795b. National Credit Union Administration Central Liquidity Facility; establishment; management; jurisdiction
There is created the National Credit Union Administration Central Liquidity Facility. The Central Liquidity Facility, an instrumentality of the United States, shall exist within the National Credit Union Administration and be managed by the Board. The United States district court shall have original jurisdiction over any case to which the Board on behalf of the Facility is a party, without regard to the amount in controversy.
(June 26, 1934, ch. 750, title III, formerly subch. III, §303, as added and amended
Editorial Notes
Codification
Section 309(b)(1) of
Amendments
1984—
1980—
1978—
Statutory Notes and Related Subsidiaries
Effective Date of 1984 Amendment
Amendment by
Effective Date of 1978 Amendment
Amendment effective on expiration of 120 days after Nov. 10, 1978, and transitional provisions, see section 509 of
Effective Date
Section effective Oct. 1, 1979, see section 1806 of
§1795c. Membership
(a) Credit unions serving natural persons
A credit union primarily serving natural persons may be a Regular member of the Facility by subscribing to the capital stock of the Facility in an amount not less than one-half of 1 per centum of the credit union's paid-in and unimpaired capital and surplus.
(b) Credit unions serving other credit unions
A credit union or group of credit unions, primarily serving other credit unions, may be an Agent member of the Facility by—
(1) obtaining the approval of the Board;
(2) subscribing to the capital stock of the Facility in an amount not less than one-half of 1 per centum of the paid-in and unimpaired capital and surplus of all those credit unions which primarily serve natural persons, which are members of such credit union or of any credit union comprising such credit union group, and which are not regular members;
(3) agreeing to comply with rules and regulations the Board shall prescribe with respect to, but not limited to, management quality, asset and liability safety and soundness, internal operating and control practices and procedures, and participation of natural persons in the affairs of such credit union or credit union group; and
(4) agreeing to submit to the supervision of the Board which shall include, but not be limited to, reporting requirements and periodic unrestricted examinations.
(c) Stock subscription requirements
Stock subscriptions provided for in subsections (a) and (b)(2) of this section shall be—
(1) based on an arithmetic average of paid-in capital and surplus over the six months preceding application and membership; and
(2) adjusted at the close of each calendar year in accordance with an arithmetic average of paid-in capital and surplus over a period determined by the Board.
(d) Functions of Agent members of Facility
An Agent member of the Facility shall perform for its member credit unions those functions required by the Board to carry out this subchapter.
(e) Withdrawal from or termination of membership
(1) A member of the Facility whose capital stock subscription constitutes less than 5 per centum of such stock outstanding, may withdraw from membership in the Facility six months after notifying the Board of its intention to do so.
(2) A member of the Facility whose capital stock subscription constitutes 5 per centum or more of such stock outstanding, may withdraw from membership in the Facility twenty-four months after notifying the Board of its intention to do so.
(3) The Board may terminate membership in the Facility if, after opportunity for a hearing, the Board determines a member has failed to comply with any provision of this subchapter or regulation issued pursuant thereto.
(June 26, 1934, ch. 750, title III, formerly subch. III, §304, as added and amended
Editorial Notes
Codification
Section 309(b)(1) of
Amendments
2020—Subsec. (b)(2).
2006—Subsec. (b)(3).
1980—Subsecs. (b), (c).
Subsecs. (d), (e).
1978—
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by section 4016(b)(1)(B) of
Effective Date of 1978 Amendment
Amendment effective on expiration of 120 days after Nov. 10, 1978, and transitional provisions, see section 509 of
Effective Date
Section effective Oct. 1, 1979, see section 1806 of
§1795d. Capital stock
(a) Opening of books; minimum subscription
As soon as practicable, the Board shall open books for subscriptions to the capital stock of the Facility. The minimum subscription shall be $50.
(b) Requirements
The capital stock of the Facility—
(1) shall be divided into shares having a par value of $50 each;
(2) shall be paid for with cash or with securities of the United States or any Agency thereof in accordance with requirements the Board may impose;
(3) shall share in dividend distributions at rates determined by the Board. However, rates on the required capital stock shall be without preference; and
(4) shall not be transferred or hypothecated except as provided for herein.
(c) Redemption of stock
When circumstances require that all or a portion of a member's stock be redeemed by the Facility, the Board shall pay an amount equal to what the member originally paid for the stock less any amount owed by the member to the Facility.
(d) Use of subscription amount
At least one-half of the payment for the subscription amount required for membership under
(e) Restriction on advances to credit unions
A credit union or credit union group that becomes a member of the Facility later than six months after the date the Board opens books for capital stock subscriptions, may not borrow or receive advances from the Facility without approval by the Board for a period of six months after becoming a member.
(June 26, 1934, ch. 750, title III, formerly subch. III, §305, as added and amended
Editorial Notes
Codification
Section 309(b)(1) of
Amendments
1980—Subsec. (a).
Subsec. (b).
Subsecs. (c) to (e).
1978—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment effective on expiration of 120 days after Nov. 10, 1978, and transitional provisions, see section 509 of
Effective Date
Section effective Oct. 1, 1979, see section 1806 of
§1795e. Extensions of credit
(a)(1) A member may apply for an extension of credit from the Facility to meet its liquidity needs. The Board shall approve or deny any such application within five working days after receiving it. The Board shall not approve an application for credit the intent of which is to expand credit union portfolios.
(2) The Board may advance funds to a member on terms and conditions prescribed by the Board after giving due consideration to creditworthiness.
(3) The Board shall not advance funds for the benefit of a credit union whose share or deposit accounts are insured by a State share or deposit guaranty credit union, insurance corporation, or guaranty association, without consultation with the appropriate State share or deposit guaranty credit union, insurance corporation, or guaranty association.
(b) The Secretary of the Treasury is authorized to lend to the Facility up to $500,000,000, in the event the Board certifies to the Secretary that the Facility does not have sufficient funds to meet liquidity needs of credit unions. Any such loan shall bear an interest rate not greater than one-eighth of 1 per centum above the current average market yield on outstanding obligations of the United States with remaining time to maturity comparable to the maturity of such loan. The authority of the Secretary to lend under this subsection shall be limited to such extent or in such amounts as are provided in advance in appropriation Acts.
(June 26, 1934, ch. 750, title III, formerly subch. III, §306, as added and amended
Editorial Notes
Codification
Section 309(b)(1) of
Amendments
2020—Subsec. (a)(1).
1980—Subsecs. (a), (b).
1978—
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by section 4016(b)(1)(C) of
Effective Date of 1978 Amendment
Amendment effective on expiration of 120 days after Nov. 10, 1978, and transitional provisions, see section 509 of
Effective Date
Section effective Oct. 1, 1979, see section 1806 of
§1795f. Powers of Board
(a) General authorities
The Board on behalf of the Facility shall have the ability to—
(1) prescribe the manner in which the general business of the Facility shall be conducted;
(2) prescribe rules and regulations to carry out this subchapter;
(3) determine the expenditures incurred by the Administration to carry out this subchapter, and the expenditures incurred by the Facility to carry out subchapters I and II of this chapter, and annually assess the Facility and the Administration accordingly;
(4) borrow from—
(A) any source, provided that the total face value of these obligations shall not exceed twelve times the subscribed capital stock and surplus of the Facility, provided that, the total face value of such obligations shall not exceed 16 times the subscribed capital stock and surplus of the Facility for the period beginning on March 27, 2020, and ending on December 31, 2021; and
(B) the National Credit Union Share Insurance Fund up to $500,000 to defray initial organizational and operating expenses of the Facility at such rates and terms consistent with prevailing market conditions;
(5) guarantee performance of the terms of any financial obligation of a member but only when such obligation bears a clear and conspicuous notice on its face that only the resources of the Facility underlie such guarantee;
(6) purchase any asset from a member with the member's endorsement;
(7) invest in obligations of the United States or any agency thereof;
(8) make deposits in federally insured financial institutions and make investments in shares or deposits of credit unions;
(9) sue and be sued, complain, and defend, in any State or Federal court;
(10) adopt a seal;
(11) pursue to final disposition by way of compromise or otherwise claims both for and against the United States (other than tort claims, claims involving administrative expenses, and claims in excess of $5,000 arising out of contracts for construction, repairs, and the purchase of supplies and materials) which are not in litigation and have not been referred to the Department of Justice;
(12) appoint officers and employees to assist in carrying out this subchapter, who shall be appointed subject to the provisions of title 5;
(13) conduct business, carry on operations, have offices, and exercise the powers granted by this subchapter in any State or territory;
(14) 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;
(15) enter into contracts with any public or private organization, partnership, corporation, or individual;
(16) advance funds on a fully secured basis to a State credit union share or deposit insurance corporation, guaranty credit union, or guaranty association. Such advance shall not exceed twelve months in maturity, shall be relent at an interest rate not exceeding that imposed by the Facility, and shall not be renewable;
(17) exercise such incidental powers as shall be necessary or requisite to enable it to carry out effectively the purposes for which the facility is incorporated; and
(18) advance funds to the National Credit Union Share Insurance Fund under such terms and conditions as may be established by the Board.
(b) Collection and settlement of checks, share drafts, etc.; charges; rules and regulations
(1) The Board may authorize the Central Liquidity Facility or its Agent members, subject to such rules and regulations, including definitions of terms used in this subsection, as the Board shall from time to time prescribe, to be drawees of, and to engage in, or be agents or intermediaries for, or otherwise participate or assist in, the collection and settlement of (including presentment, clearing, and payment of, and remitting for), checks, share drafts, or any other negotiable or nonnegotiable items or instruments of payment drawn on or issued by members of the Central Liquidity Facility, any of its Agent members, or any other credit union eligible to become a member of the Central Liquidity Facility, and to have such incidental powers as the Board shall find necessary for the exercise of any such authorization.
(2) The Central Liquidity Facility or its Agent members shall make charges, to be determined and regulated by the Board consistent with the principles set forth in
(3) The Board is authorized, with respect to participation in the collection and settlement of any items by the Central Liquidity Facility or by its Agent members, and with respect to the collection and settlement (including payment by the payor institution) of items payable by members of the Central Liquidity Facility or of any of its Agent members, to prescribe rules and regulations regarding the rights, powers, responsibilities, duties, and liabilities, including standards relating thereto, of such entities and other parties to any such items or their collection and settlement. In prescribing such rules and regulations, the Board may adopt or apply, in whole or in part, general banking usage and practices, and, in instances or respects in which they would otherwise not be applicable, Federal Reserve regulations and operating letters, the Uniform Commercial Code, and clearinghouse rules.
(June 26, 1934, ch. 750, title III, formerly subch. III, §307, as added and amended
Editorial Notes
Codification
Section 309(b)(1) of
Amendments
2020—Subsec. (a)(4)(A).
1982—Subsec. (a)(17), (18).
1980—
1978—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment effective on expiration of 120 days after Nov. 10, 1978, and transitional provisions, see section 509 of
Effective Date
Section effective Oct. 1, 1979, see section 1806 of
§1795g. Depositories, custodians, and fiscal agents
The Federal Reserve Banks are authorized to act as depositories, custodians and/or fiscal agents for the Central Liquidity Facility in the general performance of its powers conferred by this subchapter. Each Federal Reserve Bank when designated by the Board as fiscal agent for the Central Liquidity Facility, shall be entitled to be reimbursed for all expenses incurred as such fiscal agent.
(June 26, 1934, ch. 750, title III, formerly subch. III, §308, as added and amended
Editorial Notes
Codification
Section 309(b)(1) of
Amendments
1980—
1978—
Statutory Notes and Related Subsidiaries
Effective Date of 1978 Amendment
Amendment effective on expiration of 120 days after Nov. 10, 1978, and transitional provisions, see section 509 of
Effective Date
Section effective Oct. 1, 1979, see section 1806 of
§1795h. Audit of financial transactions
The Comptroller General of the United States shall audit the Central Liquidity Facility under such rules and regulations as the Comptroller may prescribe.
(June 26, 1934, ch. 750, title III, formerly subch. III, §309, as added
Editorial Notes
Codification
Section 309(b)(1) of
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1979, see section 1806 of
§1795i. Annual report
The annual report required by
(June 26, 1934, ch. 750, title III, formerly subch. III, §310, as added
Editorial Notes
Codification
Section 309(b)(1) of
Amendments
2006—
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1979, see section 1806 of
§1795j. Agent of Federal Reserve System
The facility is authorized to act upon the request of the Board of Governors of the Federal Reserve System as an agent of the Federal Reserve System in matters pertaining to credit unions under such terms and conditions as may be established by the Board of Governors of the Federal Reserve System.
(June 26, 1934, ch. 750, title III, §311, as added
§1795k. State and local tax exemption
(a) Franchise, activities, etc., of Central Liquidity Facility; exception
The Central Liquidity Facility, and its franchise, activities, capital reserves, surplus, and income, shall be exempt from all State and local taxation now or hereafter imposed, other than taxes on real property held by the Facility (to the same extent, according to its value, as other similar property held by other persons is taxed).
(b) Notes, bonds, debentures and other obligations of Central Liquidity Facility; exceptions
(1) Except as provided in paragraph (2), the notes, bonds, debentures, and other obligations issued on behalf of the Central Liquidity Facility and the income therefrom shall be exempt from all State and local taxation now or hereafter imposed.
(2) Any obligation described in paragraph (1) shall not be exempt from State or local gift, estate, inheritance, legacy, succession, or other wealth transfer taxes.
(c) "State" defined; tax status
For purposes of this section—
(1) the term "State" includes the District of Columbia; and
(2) taxes imposed by counties or municipalities, or any territory, dependency, or possession of the United States shall be treated as local taxes.
(June 26, 1934, ch. 750, title III, §312, as added