In his July 10 opinion piece, Thad Woodard, president and chief executive of the North Carolina Bankers Association, proposed "reforming" the Federal Home Loan Banks by reducing their number. Let's step back and look at the facts behind the subject.

The 12 Home Loan banks are member-owned cooperatives whose 7,500 members nationwide are composed of commercial banks, thrifts, credit unions, insurance companies and community development financial institutions. They are wholesale banks in which the customer is the member. That cooperative nature means that each Home Loan bank is compelled to stay prudent, well-managed and focused on the needs of its members and the local communities of its region.

Consolidations of Home Loan banks are a possibility and will remain an option. Through 2008's Housing and Economic Recovery Act, Congress cleared the way of legal impediments for the board of any Home Loan bank to pursue consolidation, as long as the members whom the board represents believe such action would be in their interest and in the interest of the communities they serve. The board of directors at each Home Loan bank has the authority to consolidate voluntarily with one or more Home Loan banks, if their members so desire and if their regulator approves. Any time that Home Loan bank members consider mergers, they weigh complex financial and operational factors.

Community lending institutions of all sizes and many types are very proud of their membership in the Home Loan banks. They value how the 12 cooperatives help serve the credit needs of local families, farms and businesses. It is a mechanism that has worked for more than eight decades. Throughout the nation's most recent financial crisis, the Home Loan banks remained strong and well-capitalized. They received no congressional appropriations and neither needed nor took any government bailouts. In fact, in the early stages of the 2008 meltdown, the Home Loan banks were a critical source of liquidity for the entire banking system.

While the FHLB system has been a long-time success story, its members look continuously for ways to make their cooperatives work even better. If mergers make sense, members will not hesitate to put the possibility on the table. It was appropriate for Congress to determine six years ago that the power of doing so voluntarily rests in the hands of the institutions that own and make up this national network of regional cooperatives. In a meaningful sense, that was the reform that was most important to undertake on this issue.

Steven F. Rosenbaum is chairman of the Council of FHLBanks.