Federal Home Loan Banks

The Federal Home Loan Banks (FHLBanks, or FHLBank System) are 11 U.S. government-sponsored banks that provide reliable liquidity to member financial institutions (not individuals) to support housing finance and community investment. With their members, the FHLBanks represents the largest collective source of home mortgage and community credit in the United States.

Overview

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 11 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 reliable liquidity through secured loans, 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. 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.”