are government-sponsored entities, they are relatively stable sources of funding, and the home loan banks provide a wide range of maturities and pricing options to help banks manage their liabilities.
Primarily, these institutions are the GSEs Fannie Mae, Freddie Mac, and the FHLBs
. These institutions are willing to accept a rate in the federal funds market that is lower than the IOER rate, and this drives the effective federal funds rate below the IOER rate.
The FHLBB designated each regional FHLB
president as the Principal Supervisory Agent (PSA) for that region, with senior bank staff acting as supervisory agents.
As explained in Afonso, Entz, and LeSueur (2013a,b), because most financial institutions that can hold reserve accounts in the United States are flush with reserves, the majority of lending and borrowing on the federal funds market consists of lending by FHLBs
to the branches of foreign banks in the United States.
Pending final approvals, the merger is expected to close and the two FHLBs
to begin operating as one bank out of the Des Moines office in the first half of 2015.
make up a single government-sponsored enterprise.
After the financial crisis began in the summer of 2007, the FHLB
system became an increasingly important source of funding for banks because the FHLBs
were able to lend against mortgages accumulated on banks' balance sheets.
(72.) Lockhart: FHLBS
Do Not Need Conservatorship, INVESTMENT DEALERS' DIGEST, Jan.
Interestingly, the re-intermediation of credit through the FHLBs
during the fall of 2007 was quite different from what occurred during the last major global liquidity event: the Asian financial crisis.
Federal Home Loan Bank (FHLB
) advances are loans from the FHLBs
that are collateralized by the bank's small business loans and home mortgages.
Lastly, in response to the market turmoil earlier in the year that resulted in the downgrade of several major bond insurers, the bill includes an NLC-endorsed provision that would allow the Federal Home Loan Banks (FHLBs
) to guarantee tax-exempt municipal bonds.