The Council offers a solid rebuttal to assertions contained in a recent paper published by the Yale School of Management. The paper addresses the importance for financial systems of a liquidity backstop and notes that the Fed’s discount window serves as the lender of last resort in the United States. The FHLBanks fully support the Fed’s role as the lender of last resort. However, the paper further asserts that the liquidity provided by FHLBanks negatively compromises financial system stability, a claim that is not substantiated and is the centerpiece of this rebuttal. Click here to read more.
