Liquidity

For more information on general liquidity review, please review the Liquidity Chapter of the Examiner’s Guide.

Questions to Consider

• Is the credit union’s liquidity position sufficient to manage forbearance accounts associated with federally backed loans?
• Is the credit union’s liquidity position sufficient to manage the effects of loan payment deferments, loan delinquencies, projected credit losses, and loan modifications on liquidity and cash flow forecasting?
• Is the credit union’s liquidity position sufficient to manage loans that would have been considered TDRs before the CARES Act?
• Has the credit union evaluated their contingent liquidity plans?
• Is the credit union monitoring their standard sources of funding to determine if a contingent source from a backup provider may be necessary? If so, has the credit union become reacquainted with how such access work?
• Does the credit union conduct forecasting and stress testing of its liquidity levels? Are the scenarios and assumptions used to perform the analysis reasonable and supportable to provide useful information to the credit union?
• How well has management incorporated current economic factors into its process for measuring, monitoring and controlling liquidity risk? This includes incorporating the potential effects of low interest rates and the decline of credit quality on the market value of assets, funding costs and borrowing capacity.
• Are the credit union’s contingency funding plans adequate given the results of their scenario analysis and forecasting?

Last updated on September 15, 2021