To the editor:
This month, the Federal Housing Finance Agency (FHFA) will commence a review of the Federal Home Loan Bank System, which welcomes the opportunity to work with our regulator and stakeholders to chart a course for the future.
Since 1932, the Federal Home Loan banks — the 11 regionally based, independently operated, cooperatively owned and privately capitalized wholesale-liquidity providers — have fulfilled their critical mission: to provide on-demand liquidity to support housing finance and community investment in all economic cycles and operating environments. This work has supported housing, jobs and economic growth across the country through their 6,500 members — banks, credit unions, insurance companies and community development financial institutions that are critical to local communities across the country.
The move comes amid dwindling advances and a growing concern that the Home Loan banks are participating in riskier investments.
As the U.S. financial system has developed over the past 90 years, the Federal Home Loan banks evolved to fit the needs of our members. Congress and FHFA have recognized the importance of the Home Loan banks to their members by expanding the ways in which financial institutions can use the funding they reliably provide. Today, our members can use the banks' funding to support housing and mortgage finance, small business and job growth, community and economic development, and general balance-sheet management. As a result, the Home Loan banks play a pivotal role in the U.S. financial system, and our work has impact in communities throughout the United States.
We are proud of the way the system has evolved to meet the needs of local lenders and communities, and we see the FHFA review as just the next step in that evolution. As the system approaches its centennial, it is appropriate to consider how our mission and role could be enhanced to meet the needs of today and tomorrow. We are eager to engage in this discussion.
But for the process to be successful, it must not happen in a vacuum. Home Loan bank members — the actual users of the system and the institutions that will be the most impacted by any changes to our mission, mandate or role — need to add their voice to the conversation. So do those who partner with Home Loan banks through our community investment programs, including the Affordable Housing Program, through which we have collectively delivered more than $7 billion in grants and subsidized loans since 1990 for the acquisition, construction, or rehabilitation of affordable housing initiatives across the country.
This review is not an academic exercise, but a chance to chart a better future for our communities and nation — to ensure that Federal Home Loan banks continue to meet the needs of our country. The voices of these local lenders and community partners will provide unparalleled insights that are essential to this conversation, as they are best suited to speak to the unique and vital role the system has played and will play in our nation's financial system. Working together, we will ensure that the Federal Home Loan banks continue to fulfill our mission, support our members and communities, and strengthen our country for the next 90 years.
Ryan Donovan, president and CEO, Council of Federal Home Loan Banks
