Position
- The Federal Home Loan Banks (FHLBs) must remain a strong, stable, reliable source of funding for community banks.
- ICBA opposes unnecessary efforts to steer banks away from utilizing FHLB advances in favor of using the Fed discount window as part of their liquidity planning.
- ICBA opposes any legislation or administrative action that would permit any new types of non-depository entities, which are not prudentially regulated, to access any FHLBank program or service, either directly or indirectly.
- ICBA strongly opposes any ongoing mortgage asset test for member institutions to access the FHLB system.
- The regional structure and cooperative nature of the FHLB system must be maintained, and any structural changes to the FHLB system must originate and be supported by the member owners of the system.
- Advances should remain the FHLBanks’ primary focus and members should not be required to track or segregate advances for “mission related purposes”.
- FHFA should align the capital requirements for member bank FHLB advances with the prudential regulators to avoid disruption and possible liquidity problems for otherwise well capitalized community banks.
Background
The FHFA recently completed a year-long study of the FHLBs, their mission and how the system is supporting that mission. The final report released in November of 2023 outlines 50 recommendations, many of which would negatively impact community bank use of the system. The vast majority of community banks are FHLB members. They are active advance users or rely on the availability of advances as an alternative source of liquidity and support for community development activities. ICBA will work to ensure that as the new administration and Congress consider changes to the housing finance system, the FHLBs remain a healthy, stable, reliable source of funding, liquidity and other products to serve the needs of all member-owners.
