August 14, 2023
The Financial Times recently published an article by Mark Williams, Master Lecturer of Finance, on the country’s financial system and the reliance on Federal Home Loan Banks (FHLBs).
Throughout the US, these 11 independently operated banks support community development and housing finance. These banks are viewed negatively by many, with some looking to abolish them completely, further risking liquidity, increased costs, and a decline in lending.
Williams adds that, “To simply disband or fundamentally change the system would be the equivalent of removing a storm barrier that for 90 years has successfully protected a fragile coastline.”
Rather than eliminating FHLBs completely, it is essential for policy makers to reevaluate, and further emphasize their roles as stabilizers in the financial system.