I have received multiple inquiries relative to my email this morning, and in response to these inquiries, I wanted to give you some more information on the Federal Reserve Bank Term Funding Program (BTFP) as a liquidity source for depository institutions in the wake of the closures of Silicon Valley Bank and Signature Bank. This liquidity source is available to all federally insured depository institutions, including both banks and credit unions. The BTFP offers loans up to one year in length with U.S. Treasuries, agency debt, mortgage-backed securities and other qualifying assets as collateral. Assets will be valued at par, and the rate will be the one-year overnight index swap rate plus 10 basis points.
The NCUA has also reminded credit unions about accessing the Central Liquidity Facility as a back-up liquidity source.
The Fed program could be a useful tool for credit unions until it sunsets in a year, and credit unions are urged to evaluate the terms of this program regardless of their current liquidity needs.
The process for accessing this source is very similar to the existing process using the Fed’s Discount Window. To access the funds, you’ll need to have a discount window agreement on file. Many credit unions already have this in place; you can get started HERE.
To obtain an advance, first send an email to the Richmond Fed’s Discount Window at firstname.lastname@example.org using their BTFP email template.
Note that the individual who sends the email must be designated on the Operating Circular 10: Lending Authorization List for your institution.
This same website also contains Collateral Pledge Instructions. Collateral will be pledged to your U101 Account at the Fed via Fedwire. If you have a U102 Account, you will have been automatically set up with a U101 Account as well.
For any questions about the program, you can email the Richmond Fed’s discount window at email@example.com, or reach them by phone at (800) 526-2036.
You can find more about the program below:
Program overview: https://www.federalreserve.gov/monetarypolicy/bank-term-funding-program.htm
For more information: https://www.frbdiscountwindow.org/
We will keep you up to date with any developments as they occur.