Federal Home Loan Banks

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Map of FHLB territories.

The Federal Home Loan Banks (FHLBanks, or FHLBank System) are 12 U.S. government-sponsored banks that provide stable, on-demand, low-cost funding to American financial institutions (not individuals) for home mortgage loans, small business, rural, agricultural, and economic development lending. With their members, the FHLBanks represents the largest collective source of home mortgage and community credit in the United States.


The FHLBank System was chartered by Congress in 1932 and has a primary mission of providing member financial institutions with financial products and services that assist and enhance the financing of housing and community lending. The 12 FHLBanks are each structured as cooperatives owned and governed by their member financial institutions, which today include savings and loan associations (thrifts), commercial banks, credit unions and insurance companies. Each FHLBank is required to register at least one class of equity with the SEC, although their debt is not registered.

A primary benefit of FHLBank membership is access to low cost secured borrowings, known as advances, which are funded by the FHLBanks in the capital markets from the issuance of discount notes or term debt, collectively known as consolidated obligations (COs). COs are joint and several obligations of all the FHLBanks, i.e., any debt issued on behalf of one FHLBank is the responsibility of all for repayment, with the issuing FHLBank having the primary responsibility. The Office of Finance (OF) serves as the fiscal agent for the FHLBanks, with responsibility for offering, issuing and servicing COs, as well as preparing the combined financial reports.[1] Although the individual FHLBanks are SEC registrants, the FHLBank System is not. Thus, the FHLBank System financial reports are properly viewed as “combined” rather than “consolidated.”


The 12 banks of the FHLBank System are owned by over 7,500 regulated financial institutions from all 50 states, U.S. possessions, and territories. Equity in the FHLBanks is held by these owner/members and is not publicly traded. Institutions must purchase stock in order to become a member. In return, members obtain access to low-cost funding, and also receive dividends based on their stock ownership. The FHLBanks are self-capitalizing in that as members seek to increase their borrowing, they must first purchase additional stock to support the activity. FHLBanks are exempt from all corporate federal, state, and local taxation, except for local real estate tax. The capital investments in FHLBanks receive preferential risk-weighting exemption treatment from the Basel II rules (which would normally require non-traded equity investments to be risk-weighted at 400%, but the exemption allows only 100%). The FHLBanks pay an assessment of 10% of annual earnings for affordable housing programs. The mission of the FHLBanks reflects a public purpose (increase access to housing and aid communities by extending credit to member financial institutions), but all 12 are privately capitalized and, apart from the tax privileges, do not receive taxpayer assistance.

Financial results and condition[edit]

On October 30, 2013, the FHLBanks Office of Finance published the third quarter combined operating highlights.[2] For 3Q13, the FHLBanks recorded net income of $537 million. Combined assets of the 12 FHLBanks were $789.1 billion as of September 30, 2013. Of this total, advances equaled $465 billion. Investments were the second largest component at $242 billion. Mortgage loans held in portfolio were $45 billion. The FHLBanks made affordable housing contributions of $65 million in the third quarter of 2013.

The principal assets of the FHLBanks are advances (secured loans to members), Federal funds sold, commercial paper, mortgage-backed securities, and GSE securities. The FHLBanks are required by regulation to hold collateral in excess of the actual loan amount for any given borrower. The FHLBanks are funded through the daily sale of debt securities in the global capital markets. All 12 FHLBanks are jointly and severally liable for the liabilities of each individual FHLBank. Since August 2006, all 12 Banks have been registered with the United States Securities and Exchange Commission and all financial statements and other filings are available to the public at the SEC web site (EDGAR). (See external links)

At September 30, 2013, each of the FHLBanks was in compliance with its statutory minimum capital requirements[3] and the FHLBank System as a whole is well above its minimum capital requirements.

On August 5, 2011, the Federal Housing Finance Agency announced that the FHLBanks had satisfied their obligation to make payments related to the Resolution Funding Corporation (RefCorp) bonds. The Banks were required to pay 20 percent of their net income (after payments to the Affordable Housing Program) toward the RefCorp bond payments. Each Bank now pays 20% of its net income into its own separate restricted retained earnings account until the account equals one percent of that Bank’s outstanding consolidated obligations.[4]


As a result of the Great Depression the FHLBanks were established by the Federal Home Loan Bank Board (FHLBB) pursuant to the Federal Home Loan Bank Act of 1932. This was in order to provide funds to "building and loan" institutions, providing liquidity and making mortgages available.

As a result of the savings and loan crisis of the 1980s the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) abolished the FHLBB and transferred oversight responsibility of the FHLBanks to the Federal Housing Finance Board (FHFB) and regulatory responsibility to the Office of Thrift Supervision (OTS) in the Department of the Treasury. FIRREA also allowed all federally insured depository institutions to join the FHLBank System, including commercial banks and credit unions.

As a result of the late-2000s financial crisis the Housing and Economic Recovery Act of 2008 (HERA) replaced the FHFB with the Federal Housing Finance Agency (FHFA). The Secretary of the Treasury was authorized to purchase FHLBank debt securities in any amount through December 31, 2009, after which the limit would return to the original $4 billion. On September 7, 2008, the U.S. Treasury announced a new credit facility for the three housing government-sponsored enterprises. This enabled the Secretary of the Treasury to purchase FHLBank debt in any amount subject to the pledging of advances and other assets as collateral. The authority for this facility expired on December 31, 2009.

As a result of the late-2000s recession, section 312 of the Dodd-Frank Wall Street Reform and Consumer Protection Act mandated merger of OTS with the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board of Governors, and the Consumer Financial Protection Bureau (CFPB) as of July 21, 2011.

On July 31, 2014, it was announced that the Federal Home Loan Banks of Seattle and Des Moines were discussing a potential merger. This would be the first voluntary merger of members of the Federal Home Loan Bank system.[5]

Related legislation[edit]

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