A system of 12 American
banks whose purpose is to provide low-
cost loans for
mortgages, businesses, and urban and rural economic development. The FHLB is not
publicly traded, but rather is owned by several thousand banks and other financial institutions. These institutions buy
stock in the system in order to become eligible for subsidized loans, which they then make to high-
risk customers. Established in 1932 during the Great Depression, the FHLB largely succeeded in its original purposes of putting people in affordable homes. However, in the late 2000s, the FHLB began to have
cash flow problems due in part to overexposure to the housing bubble and became the largest
borrower from the United States government.