Congress Passes Sherman Provision to Support Credit Unions in COVID-19 Relief Package
Washington, D.C. – Late last night the House and Senate passed a major provision of Congressman Brad Sherman (D-Sherman Oaks) and Congressman Brian Fitzpatrick’s (R-PA) H.R. 6789, the Access to Credit for Small Businesses Impacted by the COVID-19 Crisis Act, as included in H.R. 133, legislation to fund the federal government and provide over $900 billion in emergency assistance. This legislation will ensure that America’s credit union system remains strong by guaranteeing that the National Credit Union Central Liquidity Facility maintains the flexibility it needs to support credit unions through the ongoing crisis.
The Central Liquidity Facility (CLF), which is overseen by the National Credit Union Administration, was established by Congress in 1998 to provide stability to the country’s credit union system by serving as a lender of last resort for participating credit unions. The CLF maintains a pool of capital and borrowing authority that allows it to lend to credit unions experiencing unusual or unexpected liquidity shortfalls. In response to the economic turmoil sparked by the COVID-19 pandemic in the spring of 2020, the CARES Act temporarily provided the CLF with expanded borrowing authority and enhanced flexibility to allow the Fund to support a broader number of credit unions during the crisis.
Under the CARES Act, this temporary authority and flexibility for the CLF was set to expire on December 31, 2020. In May, Congressman Sherman, Congressman Fitzpatrick, Chairwoman Maxine Waters (D-CA), and a bipartisan group of their House colleagues introduced the Access to Credit for Small Businesses Impacted by the COVID-19 Crisis Act which included a provision to extend this expiration date by a full additional year, until December 31, 2021. This provision of the Access to Credit for Small Businesses Impacted by the COVID-19 Crisis Act has now been passed by Congress, as section 540 of H.R. 133, the Consolidated Appropriations Act for Fiscal Year 2021. With the passage of this provision, Congress has taken an important step towards ensuring credit unions can continue to function through this emergency and continue to provide credit to struggling consumers and small businesses.