The outlook for the Federal Home Loan Banks is stable, but Standard & Poors’ Global Ratings points to a few potential weaknesses that could threaten the health of the system. S&P pointed to the small but growing exposure to nondepository financial institutions as a cause for concern. The rating agency also warned of challenges to broad-based advance growth and longer-term uncertainty due to potential legislative changes associated with housing-finance reform. And although the FHLBanks have increased their reliance on short-term funding in response to demand from its members, S&P said, “Given the generally match-funded approach to issuance, as well as the overcollateralization of advances to members, we believe that the tenor of the system's funding remains manageable.”