Regulators Don't Get What Makes FHLB Necessary

Late last year, the Federal Housing Finance Agency (FHFA) released a study proposing potentially harmful reforms to the Federal Home Loan Bank (FHLB). Of particular importance are measures that could dissuade larger banks from becoming members of the FHLB system, which would only undermine the system's ability to offer reliable low-cost liquidity. Despite being the FHLB's chief regulator, the FHFA fundamentally misunderstands what makes the FHLB so integral to small and local banking. In a new study published this week, the American Consumer Institute (ACI) helps set the record straight.