Define: Federal Home Loan Bank

The Federal Home Loan Bank (FHLB) is a government-sponsored enterprise established by Congress to provide liquidity and funding to member financial institutions, such as banks and credit unions, in order to support housing finance and community development.

To become a member of the FHLB, a financial institution must meet certain eligibility criteria, including being regulated by a federal or state banking agency, having a certain level of capital, and being engaged in residential mortgage lending or community development activities.

As a member of the FHLB, financial institutions gain access to low-cost funding through various borrowing programs offered by the FHLB. They can also participate in the FHLB’s community investment programs and receive dividends on their FHLB stock holdings.

No, only financial institutions, such as banks and credit unions, are eligible to become members of the FHLB. Non-financial institutions or individuals cannot become members.

The FHLB’s community investment programs aim to promote affordable housing and community development by providing grants, loans, and other financial assistance to support projects that benefit low- and moderate-income individuals and communities.

The FHLB conducts regular examinations and assessments of its member institutions to ensure their financial stability and compliance with applicable laws and regulations. It also sets certain capital requirements and risk management standards that members must meet.

Yes, a financial institution can lose its membership in the FHLB if it fails to meet the ongoing eligibility requirements or violates the FHLB’s rules and regulations. In such cases, the FHLB may terminate the institution’s membership.

No, the FHLB does not provide direct loans to individuals or businesses. Its primary role is to provide funding and liquidity to its member financial institutions, which in turn lend to individuals and businesses.

The FHLB is regulated by the Federal Housing Finance Agency (FHFA), which oversees its operations, ensures its compliance with applicable laws and regulations, and sets certain safety and soundness standards.

No, the FHLB is not liable for any losses incurred by its member institutions. Each member institution is responsible for its own financial performance and assumes the associated risks. The FHLB’s role is to provide support and assistance to its members, but it does not guarantee their financial obligations.