In 1932 the purpose of the Federal Home Loan Bank system was housing. In 1989 it was extended to include community investment lending. In 1999 what was adopted and embraced by the Gramm-Leach-Bliley Act was the idea that small banking institutions - called community financial institutions in the legislation - need a central bank for general liquidity.

While large institutions have choices - and while serving large institutions through the Home Loan Bank system is appropriate, particularly for targeted needs and housing finance, where so much of the marketplace is supported by a government cost-of-funds advantage - small institutions have special needs.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.