A rich new federal report assessing the Federal Home Loan Bank (FHLB) system will help the public and policymakers achieve effective reforms to improve the FHLBs’ future performance, community advocates said Wednesday.
“Government support is crucial in closing the racial homeownership divide, but the dollars deployed through the FHLB system are too often captured on private investor balance sheets,” said Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition (NCRC). “I applaud the Federal Housing Finance Administration for its work on this report, which is a major milestone in the FHLB reforms to which FHFA has committed itself.”
The new report, “FHLBank System at 100: Focusing on the Future,” reflects months of work and many hours of discussion with stakeholders including NCRC. FHFA embarked on its review of the FHLBs last year, making a public commitment to identify ways it could modernize the FHLB system and better ensure that the FHLBs serve the public. NCRC has called for reforms that would strengthen community-based accountability, increase affordable housing resources and further fair housing. The recommended changes would also more effectively support Community Development Finance Institutions (CDFIs) as well as important community development investments in climate resilience and other projects.
“NCRC and other advocates have criticized the existing FHLB system for using public support to generate private profits without sufficient accountability or public benefit, while noting the important potential for reforms to expand much-needed resources for affordable housing and other critical community development funding,” Van Tol said. “The report release is an important and positive step forward. We hope it will soon be followed by concrete steps to reform the FHLBs through shrewd action by FHFA.”