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.