Authorization To Issue Debt Obligations

GAO was asked whether the National Credit Union Administration (NCUA) had the authority to offer, in the public credit markets, certain debt instruments for the purpose of funding activities of the NCUA Central Liquidity Facility. Specifically, NCUA requested concurrence on its position that: (1) NCUA has the authority under the Federal Credit Union Act to issue debt obligations on behalf of the Central Liquidity Facility; and (2) such obligations will, when duly executed and authenticated and delivered to the purchasers against payment of the agreed consideration, constitute legal, valid, and binding general obligations of the United States and will be backed by the full faith and credit of the United States. GAO held that, under the law, NCUA has the authority to issue its own debt obligations on behalf of the NCUA Central Liquidity Facility. However, the debt obligations that NCUA issues on behalf of the Central Liquidity Facility would not be general obligations of the United States supported by the full faith and credit of the Federal Government. GAO believed that the Federal statute which established a specific limitation on the amount of Central Liquidity Facility borrowing expressed in clear and absolute terms that borrowings on behalf of the Central Liquidity Facility would not be guaranteed by the Federal Government.