FEDERAL HOME LOAN BANK SYSTEM

The Federal Home Loan Bank System was created in 1932 by the Federal Home Loan Bank Act which was enacted to restore confidence in the nation's financial institutions and re-establish the housing market. This was a response to the economic depression which had undermined the banking system and created the need for a credit system to ensure the availability of funds for home financing. Since 1989, the Federal Home Loan Bank System's public policy mission has been expanded to include Affordable Housing and Community Development lending.

FHLBank Districts

There are twelve District Banks:

The Banks are government chartered member-owned corporations regulated by the Federal Housing Finance Board. Financial institutions that are members own stock in the Banks.  

Each District Bank is governed by a board of at least fourteen directors. Six directors are appointed by the Finance Board as public interest directors, two of whom represent community or consumer interests. A minimum of eight industry directors are elected by the Banks' member institutions. Each year, the Finance Board designates a Board chair from the appointed group and a vice chair from the elected group.

Member Financial Institutions

Bank System members include Federal and State chartered thrift institutions, commercial banks, credit unions and insurance companies. A financial institution joins the District Bank that serves the state where the institution's home office or principal place of business is located. Currently, there are over 6,504 members.

A financial institution can become a member by meeting certain statutory requirements:

• it must be duly organized under the laws of any State or of the United States;
• it must be subject to inspection and regulation under the banking laws, or similar State or Federal laws;
• it must make long-term mortgage loans;
• it must have at least 10 percent of its total assets in residential mortgage loans;
• it must be in a financial condition that such District Bank advances (loans) may be safely made;
• it must have character of management and a home financing policy consistent with sound and economical home financing.

Once the financial institution is approved for membership by the Finance Board, the institution becomes a member by purchasing District Bank stock.

Support for Housing and Community Development

The Federal Home Loan Bank System

• Serves as a lender of first resort for its members;
• Provides long term advances on the security of many types of mortgage collateral, further distinguishing the Bank System from other funding sources;
• Provides liquidity for housing finance and community development by making advances to those financial institutions that are members of the Banks;
• Provides a source of long term mortgage funds, asset-liability management tools and liquidity for a member's very short term needs. Profitability for members is also enhanced since they can keep more assets in higher yielding investments. The Banks also provide low-cost advances to members to support the Affordable Housing and the Community Investment Programs; and
• Makes advances to their member financial institutions at interest rates that are lower than those in the commercial market, particularly on longer term funds. Loans are priced at small spreads over comparable Treasury obligations.

The FHLBanks, through the Office of Finance, raise funds by selling consolidated obligations to institutional investors. Because the System has a stand-alone Triple-A credit rating and is a government-sponsored enterprise (GSE), it can raise debt at rates only slightly higher than Treasury securities.

For a map of the states in each FHLBank District and address information, click here.

Return to Federal Housing Finance Board's Home Page

This page was last updated: December 20, 1996