WASHINGTON — The Federal Housing Finance Agency, led by Bill Pulte, took an unusual step by reducing the number of Federal Home Loan Bank board director seats at most of the 11 Federal Home Loan Banks, with the steepest reductions at institutions located in heavily-Democratic cities.
In doing so, the Trump administration is quietly shaping the direction of the institutions that have grown to be important backstops of liquidity for banks across the country. The FHLB board members steer the direction of the FHLBanks, including in selecting the FHLB CEO.
Pulte has emerged as a particularly aggressive and divisive figure in the Trump administration, especially with respect to personnel that impact key economic and financial policy.
He recently
Trump sent Cook a letter saying he was
Kathryn Judge, a law professor at Columbia Law School, said Pulte's moves against Cook and the reduced number of FHLBank directors should be viewed as part of a broader push to unseat Democrats or perceived opponents of the administration.
"This is an unusual move, and it's coming at a time and from an administration that is aggressively using its authority to restructure much of government and pushing constitutional bounds," Judge said. "So this move should not be seen in isolation."
Pulte issued an order earlier this summer designating new board structures for 2026 that will downsize the governing bodies of 9 of 11 of the Federal Home Loan Banks, according to a document viewed by American Banker.
The most dramatic cuts come in Democrat-leaning cities — areas where the Trump administration has
The San Francisco bank would have only nine board members, the smallest number of any of the institutions. The FHLB statute says that the banks should have a board of 13 members, "or such other number as the Director may determine."
Reducing the size of the FHLBank boards is an issue that has some measure of bipartisan support. Not only have some Republicans raised concerns about the compensation and size of the boards, progressive policymakers have
"A charitable reading is that these boards have gotten big and bloated," said Aaron Klein, a senior fellow at the Brookings Institution. "Which is not good from a corporate governance standpoint, and it's a way in which the Home Loan Banks have suddenly extended their power and reach."
But Pulte's involvement complicates the issue.
"Gutting the boards will reduce their political clout and presumably increase their bottom line a little bit," Klein said. "So the question becomes, why were the specific people targeted? This is one where Pulte's reputation has suffered of being the President's attack dog going after his enemies list on the Fed has lost him the benefit of the doubt in his real regulatory job."
Most of the banks have 14 directors under the new FHFA order, made up of eight "member" seats, or those that represent FHLB member institutions, and six independent seats. The San Francisco FHLB is the only institution that falls below that threshold.
The FHFA did not reduce any seats at just two of the 11 FHLBs: The Federal Home Loan Banks of Atlanta and Des Moines.
The restructuring comes as the Trump administration has moved aggressively to reshape federal agencies and push
Senate Republicans have previously taken aim at the FHLB of San Francisco in particular. In a letter addressed to Pulte, Republicans including Senate Banking Committee Chairman Tim Scott, R-S.C., asked Pulte about FHLBank of San Francisco allegedly agreeing "to make a multimillion-dollar payment to a former Biden political appointee who had worked there only for a few months as part of a separation agreement," apparently referring to former Ginnie Mae President Alanna McCargo. McCargo became president of the bank in May 2024 and
The FHFA order does not say the names of the directors whose positions will be eliminated, but it does spell out seats that will not be filled. For many, there is only one person occupying the designated time slots.
Only the FHLBank of Topeka spelled out the names of the directors whose positions will be eliminated in a regulatory filing with the Securities and Exchange Commission.
The FHLBank's board of directors, according to the 8K filed with the SEC, determined that the Oklahoma member directorship held by Gregg Vandaveer, the Chairman of Sooner State Bank, and the independent directorship held by Carla Pratt, a law professor at the University of Oklahoma who writes about inequity, diversity and the Jan. 6 insurrection at the U.S. Capitol, would be eliminated as of December 31, 2025.
One of the Topeka bank's expiring Nebraska member directorships, held by Michael Jacobson, will also not be filled in the 2025 director election, the bank said. Jacobson is a Nebraska state legislator in the Republican party who was
Who the other directorship eliminations affect is not as easy to figure out. In some cases, the FHFA says that the FHLB must eliminate a seat that could include two or more current board directors. In those cases, it will be up to the FHLB boards to suss out who stays and who goes.
Judge said that there may not be anything nefarious in reducing or increasing the number of FHLB board seats, but how those reductions play out and who is affected will elucidate the impact that the reductions might have on those individuals and the banks' credibility.
"The board size itself is not a magic number," Judge said. "The real question is who is allowed to continue to serve, who is removed."
