August 30, 2023
American Banker recently published an article featuring Master Lecturer of Finance, Mark Williams, on the debate over whether there is any benefit of the Federal Home Loan banks changing their legal structure to public benefit corporations.
By having the 11 banks’ boards of directors balance their for-profit business with the public mission of funding affordable housing and community development, some believe the banks should rebuild their systems.
Williams strongly disagrees by stating, “It would be hard to shoehorn something as complicated as the Home Loan banks into a brand new legal structure…I’m not convinced that the Federal Home Loan Bank model is broken.”
Because some blamed the Home Loan Banks for the recent banking crisis, and even if such claims lack merit, this 91-year old banking system has been forced to remind the market of its important on-demand liquidity provider role.