Federal Home Loan Banks

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Federal Home Loan Banks

The institutions that regulate and lend to savings and loan associations. The Federal Home Loan Banks play a role analogous to that played by the Federal Reserve Banks vis-à-vis member commercial banks.

Federal Home Loan Bank System

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.

Federal Home Loan Banks (FHLBanks)

The largest source of residential mortgage and community development credit in the United States. This group consists of a regional cooperative of 12 FHLBanks, each with its own president and board of directors. Its primary business consists of FHLBank Advances, which are low-cost loans made to member institutions.This gives those members the liquidity to make mortgage loans.The FHLBanks (www.fhlbanks.com) regenerate their own liquidity by selling debt consisting of consolidated bonds with maturities of one year or more, and consolidated discount notes which mature within 360 days.

References in periodicals archive ?
Each of the 11 FHLBanks administers its own AHP, making the combined Affordable Housing Program one of the largest private sources of grant funds for affordable housing in the United States.
The final rule, which becomes effective 30 days from publication in the Federal Register, also requires FHLBanks to obtain and review audited financial statements for insurance company applicants when considering them for membership, and clarifies the standards for determining the location of an institution's principal place of business for purposes of identifying the appropriate FHLBank district for membership.
The FHLBank of Des Moines is one of eleven FHLBanks that comprise the
Created by the US congress in 1932, the FHLBanks are a source of funds for local lenders to finance housing, community development, jobs and economic growth.
Further, Weller illustrates the structure of FHLBanks as unique in three ways:
The FHLBanks System has said that it is planning to launch a new USD3bn two-year global bond issuance.
The ACLI comment letter said 101 life insurance company members of the FHLBanks for which ACLI has data have $220 billion invested in residential mortgage loans, residential mortgage-backed securities and commercial mortgage-backed securities, including multi-family housing.
The FHLBanks were created 78 years ago--during an earlier period of major financial upheaval--to provide a steady stream of low-cost capital to the housing market.
While the application varies from bank to bank, the FHLBanks typically manage their debt issuance as well as a wide array of fixed income investments and complex hedging instruments using the software.
The FHLBanks, however, have not experienced the same financial problems as Fannie Mae and Freddie Mac, leading policymakers and regulators to consider what aspects of the FHLBanks' business model and governance structure make it different from other housing-related GSEs and whether these differences result in an overall lower risk profile.
The FHLBank System (FHLBank System or System) is a government-sponsored enterprise (GSE) that consists of 12 Federal Home Loan Banks (FHLBanks) and is cooperatively owned by member financial institutions, typically commercial banks and thrifts.
Diversification risk: Both the FCS's federal land banks of the 1980s and the present-day FHLBanks are restricted geographically in their lending portfolio, and both prevent member institutions from diversifying risk through multiple membership.