Failing and cash-starved banks often turn to their lender of last resort for a shot of liquidity. For community and regional banks, that’s usually their FHLBank. (Includes three data charts.)
It’s been 10 years since the Federal Housing Finance Agency has examined the mandatory competitive programs of the Federal Home Loan Banks’ affordable housing program.
Digital assets specialist Silvergate Bank bolstered its liquidity with an FHLB advance after the implosion of crypto king FTX caused a run on the bank's deposits in the fourth quarter.
While the FHLBanks tout the utility of the system’s status quo, small independent mortgage bankers push a change that would give nonbanks access to FHLB credit without FHLB membership.
FHFA applies a capital treatment to banks that differs from those used by federal banking regulators. The differences could limit banks’ ability to access Federal Home Loan Bank advances.
FHFA is expected to produce a long list of recommended actions to modernize the FHLBank system, but large-scale reform will probably require legislation.
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