The Federal Home Loan Banks are an essential source of stable, low-cost funds to financial institutions for home mortgage, small business, rural and agricultural loans. With their members, the FHLBanks represent the largest source of home mortgage and community credit.
The 12 banks of the FHLBank System are owned by over 8,000 community financial institutions. Rather than being publicly traded, equity in the FHLBank System is held by these owner/members.
Financials
FHLB borrowing was $545.5 billion during 2003, a 35% increase from 2002. During 2003, total U.S. residential mortgage production reached a record level of $3.8 trillion.
The 12 banks of the FHLB system are owned by over 8,100 financial institutions from all 50 states.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) abolished the FederalHomeLoanBank Board and transferred responsibility for oversight of the FederalHomeLoanBanks to the Federal Housing Finance Board.
At that time the Bank Board’s previous supervisory and regulatory responsibilities with respect to thrift institutions and their holding companies were transferred to the newly created Office of Thrift Supervision, under the U.S. Department of the Treasury.
Also, by providing commercial banks and savings institutions with another outlet for their mortgages, the amount of capital available for more loans is increased, and that leads to better rates and terms for borrowers.
Since then, nine of the 12 regional banks -- and soon to be 10 which buy fixed-rate loans from their member institutions have passed the $13 billion mark in MPF purchases along with $93 billion in master commitments.
Christian, who was chairman of the FederalHomeLoanBank of Pittsburgh before moving to Atlanta a year ago, questioned whether Fannie Mae and Freddie Mac are truly interested in competition or are simply trying to hold on to their share of the mortgage pie.
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