Federal Home Loan Bank System


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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 Bank System (FHLBS)

A government-sponsored enterprise established in 1932 to improve the supply of funds to lenders, including credit unions, thrifts, banks, and insurance companies that finance loans for home mortgages. With an AAA credit rating the system is able to borrow funds at relatively low cost and pass the savings through to borrowers in the housing market.
References in periodicals archive ?
Gramm-Leach-Bliley included provisions that further displace support for the financing of owner-occupied houses as the singular public purpose of the Federal Home Loan Bank System. The statute permits community financial institutions--defined as FDIC-insured institutions with under $500 million in assets--to join a Federal Home Loan Bank even if they do not have 10 percent of their assets in housing.
(22.) THE FEDERAL HOME LOAN BANK SYSTEM, 1932-1952, supra note 10, at 56-57.
* Capital Structure of the Federal Home Loan Bank System, GAO/GGD-99-177R, published by the U.S.
(5.) At that time, the Federal Home Loan Bank System consisted of 12 Banks (similar in charter and organization to the 12 Federal Reserve Banks), the Federal Savings and Loan Insurance Corporation (similar to the FDIC), the Home Owners Loan Corporation, the Federal Home Loan Bank Board (analogous to the Federal Reserve Board) to oversee the System, and charter federal savings and loans (equivalent to the Office of the Comptroller of the Currency).
Expanding the eligibility of the Federal Home Loan Bank System to privately-insured credit unions is long-overdue, Brown said in a statement.
A: I believe that any regulatory restructuring of Freddie Mac and Fannie Mae must also include the Federal Home Loan Bank System. We have a unique opportunity to improve the regulatory regime of the housing GSEs, and it would be irresponsible not to include the Federal Home Loan Banks.
See Federal Housing Finance Board, "Effect of Federal Home Loan Bank System District Banks on the Housing Finance System in Rural Areas" (FHFB, April 23, 1993).
There are two types of housing GSEs: Fannie Mac and Freddie Mac (the secondary market institutions that buy loans from qualified mortgage originators), and the Federal Home Loan Bank System (a dozen banks that make belowmarket-rate loans available to mortgage lenders that belong to the system).
A regional bank included in the Federal Home Loan Bank System, FHLBank Indianapolis is owned by its Indiana and Michigan financial institution members, which include commercial banks, credit unions, insurance companies, savings institutions and community development financial institutions.
He mentioned that certified CDFIs can become members of the Federal Home Loan Bank System and access its lower-cost funds, as permitted under recent legislation.
SOURCES: Federal Home Loan Bank System, Quarterly Financial Report, September 30, 2002; and annual reports.

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