Feedback: FHLB System Performed as Intended in Crisis

Re: "FHLB System's Rationale Erodes as Advances Dwindle" Nov. 29. This article and the online survey on the relevance of the Federal Home Loan banks did not tell the whole story.

In the recent financial crisis, the Federal Home Loan banks performed exactly as intended: Advances swelled to meet the demand that kept liquidity flowing. Without the Federal Home Loan banks the crisis would have been far worse and community banks and the communities, individuals and businesses they serve would have been harmed in untold ways.

Now, less than two years on, it is a good sign that advances have shrunk. Demand for advances is down because of recovery in other areas of the credit markets. That does not mean, however, that the Federal Home Loan banks no longer are needed. The banks were created more than 70 years ago as a response to a terrible financial crisis. In the most recent financial crisis they stepped up and did the job they were intended to do. Given that economic cycles repeat, there will be a need for the Federal Home Loan banks going forward — hopefully not as dramatic a need as in recent years. Every day — in good times and bad — the banks raise money from the capital markets across the world and make it available for community banks and others to lend for affordable housing, job growth and economic development. That is more relevant than ever.