Nonbanks and REITs make a bid for FHLBank membership. Community banks and credit unions say that would be a mistake. Is there a middle ground?

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.

If the nation goes into recession, paper losses on Treasuries and MBS may deprive small community banks from accessing critical FHLBank advances.

Systemwide, FHLBank advances grew 36.5% in the third quarter, helping drive a 51.1% sequential increase in profits. (Includes three data charts.)

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.

Funding for affordable housing and community investment programs declined across the board as the FHLBanks’ profits waned in 2021.

FHFA is expected to produce a long list of recommended actions to modernize the FHLBank system, but large-scale reform will probably require legislation.

An increase in member borrowing contributes to a $105 million increase in profits for the FHLB system. (Includes three data charts.)