Comment letter reinforces valuable role the FHLBanks play for consumers and the economy
Washington, DC – July 15, 2024 – The Council of Federal Home Loan Banks, in a comment letter to the Federal Housing Finance Agency (FHFA) reinforced the crucial role the Federal Home Loan Banks (FHLBanks) play in supporting the health of their members and the U.S. financial system.
The comment letter makes clear that the FHLBanks are fulfilling the mission laid out in statute, reflecting the intent of Congress, that the FHLBanks are providing significant benefit to their members, to consumers, and to the broader financial system, and that any changes to the FHLBanks’ mission are necessarily under the proper purview of Congress.
“The FHLBanks have been a force for good for nearly a century – for their members, for the housing market, for consumers, for the financial system, and for the economy,” said Ryan Donovan, president and CEO of the Council of Federal Home Loan Banks. “The FHLBanks have successfully achieved the mission Congress has laid out for them for more than 90 years. The liquidity they provide supports housing finance and economic development and plays an irrefutably valuable role in maintaining stability in the financial services sector. Their recently published 2023 Impact Report makes this abundantly clear and also demonstrates their commitment to innovation as a means for better addressing the housing and economic development needs of local communities within each FHLBank district. The nation needs the FHLBanks.”
The comment letter maintains that mission of the FHLBanks, as established by Congress, is to provide liquidity to members and support housing and community development, and that the mission is found within the structure and requirements of the Federal Home Loan Bank Act (Bank Act). It further notes that Congress has made significant changes to the FHLBanks’ mission in the past when it considered it appropriate, and the proper measurement of mission adherence is the extent to which the FHLBanks are performing the obligations Congress has prescribed to them in the Bank Act.
The comment letter further notes that the FHLBanks fulfill their statutory mission by providing liquidity to their members backed by eligible collateral, by fully funding their annual Affordable Housing Program contributions, and by initiating voluntary programs to further support their members’ housing and community development activities in their communities. It also refers to the recently published 2023 Impact Report which describes the national impact that emanates from the FHLBanks’ fulfilling their statutory mission, including more than 50 examples of programs and initiatives the FHLBanks support through their members across the country.
The comment letter concludes by noting that the potential changes contemplated by the RFI could have a profound impact on the future of the FHLBanks, their districts, and, particularly, on their members who rely on the FHLBanks to provide liquidity through all economic cycles.
Click here to read the letter.
About: The FHLBanks are 11 regionally based, wholesale suppliers of lendable funds to financial institutions of all sizes and many types, including community banks, credit unions, commercial and savings banks, insurance companies, and community development financial institutions. The FHLBanks are cooperatively owned by member financial institutions in all 50 states and U.S. territories. The steady supply of lendable funds from FHLBanks helps U.S. lenders invest in local needs including housing, jobs, and economic growth. The Council of FHLBanks represents all 11 FHLBanks.
