Why US Is Overhauling Federal Home Loan Banks: QuickTake

The Federal Home Loan Banks are facing heightened scrutiny since a series of bank failures in early 2023 brought attention to their expansive role in the US financial system. These government-sponsored lenders have morphed from their Depression-era roots in home lending to a general liquidity backstop for banks of all sizes. FHLB loans hit a record $1 trillion in 2023, and a federal regulator has recommended sweeping changes, setting off a high-stakes battle over the banks’ future.

1. What are the FHLBs?

The US Congress set up the FHLB system in 1932 to make it easier for savings and loan ...