Mid-Atlantic Corporate’s Comment on NCUA’s Liquidity Plans

The NCUA Chairman Michael Fryzel yesterday announced plans to provide additional liquidity to the credit union system through the Central Liquidity Facility.  Chairman Fryzel announced two plans, CU Harp (Credit Union Homeowners Affordability Relief Program), which enables eligible credit unions to access CLF funds to help modify mortgage terms to assist delinquent borrowers.  According to the NCUA release, the second program CU SIP, is designed to complement CU HARP by enabling the CLF to lend to credit unions to invest in NCUSIF guaranteed notes, the proceeds of which will be used to retire corporate borrowings from the Federal Home Loan Banks and the Federal Reserve.

At this time Mid-Atlantic Corporate is still analyzing the details of both programs, but it is unlikely that Mid-Atlantic will participate in CU SIP.  In order to issue SIP Notes a corporate had to previously gain a guarantee of its external borrowings under NCUA’s Temporary Corporate Credit Union Liquidity Guarantee Program (TCCULGP).  Since Mid-Atlantic has no external borrowings, and therefore no need for a guarantee under TCCULGP, we cannot offer any SIP Notes at this time.  We do not anticipate Mid-Atlantic needing to participate in this program.
Mid-Atlantic Corporate has positioned ourselves to meet our members liquidity needs by diversifying our lines of credit.  While Mid-Atlantic has maintained a line of credit with US Central, we have also diversified lines among several financial institutions.  Before the end of the month, Mid-Atlantic will also have access to the Federal Reserve discount window.  The Corporate stands ready to meet the liquidity needs of our members as they arise.
As stated above we are still reviewing the CU HARP program details.  However we believe this program offers an encouraging step toward credit unions helping consumers who are in difficult financial straights.

We are just learning the details of these programs and will provide additional information to you as we learn more.