[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-seo-324992-105":3,"detail-sidebar-cat-0-en-105":81,"doc-detail-324992-en":131},{"code":4,"msg":5,"data":6},0,"ok",{"site_id":7,"language":8,"slug":9,"title":10,"keywords":11,"description":12,"schema_data":13,"social_meta":74,"head_meta":76,"extra_data":78,"updated_unix":80},105,"en","the-evolving-role-of-the-federal-home-loan-banks-in-mortgage-markets","The Evolving Role of the Federal Home Loan Banks in Mortgage Markets","","The commentary explains how the Federal Home Loan Banks (FHLBs), created by the U.S. federal government to promote homeownership, have evolved within U.S. mortgage markets. It describes their traditional liquidity mission through secured advances, membership expansion after 1989, and the growing role of investment portfolios and mortgage-backed securities. Recent legislative changes, new lending authority, direct mortgage loan holdings, and securitization initiatives reshape their balance-sheet implications.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & 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Banks play in the U.S. housing finance system?","Question",{"text":63,"@type":64},"They are part of a federal system created to promote homeownership and traditionally provide liquidity to the housing finance industry by making secured advances to member institutions.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"How did legislation in 1989 affect FHLB membership?",{"text":68,"@type":64},"The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 opened membership to commercial banks, expanding participation from housing-focused institutions.",{"name":70,"@type":61,"acceptedAnswer":71},"What major initiatives expanded FHLB activities beyond traditional advances?",{"text":72,"@type":64},"Over time they increased investment portfolios, adopted direct holdings of mortgage loans starting in 1997, and some FHLBs were permitted to operate programs securitizing mortgage assets purchased from members.","https://schema.org",{"og:url":32,"og:type":75,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":77,"canonical":32},"index,follow",{"doc_id":79,"site_id":7},324992,1790281107,{"code":4,"msg":82,"data":83},"success",[84,88,92,96,101,106,111,115,120,123,127],{"id":22,"doc_module":4,"doc_module_name":25,"category_name":85,"show_sort_weight":86,"slug":87},"Story & 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\nThe 1929-33 contraction had far reach-ing effects in many directions,no leaston monetary institutions and academicund popular thinking about the mole ofmonetary factors in the economy:Anumber of special monetary institutionswere established in the course of thecontruction,notably the ReconstructionFinance Corporation and the FederalHome Loan Banks,…  \n—Friedman and Schwartz(1963)Created by 1932 legislation,the Fed-eral Home Loan Bank System is part ofthe federal infrastructure for promotinghome ownership in the United States.For much of its history,the System's 12Federal Home Loan Banks(FHLBs)have fulfilled their mission by providingliquidity to the housing finance industry,primarily the nation's savings and loansand savings banks.More recently,theyhave assisted commercial banks as well.The FHLBs increase theliquidity ofmortgage markets by making advances(loans)to member institutions,whichuse the advances to make new mortgageloans.Advances are secured against themembers'mortgage-related assets.  \nThe 1980s thrift debacle resulted inlegislation that completely overhauled thefederal regulatory system for savings andloans and the Federal Home Loan BankSystem.The System underwent majorrestructuring,but the fundamental missionof the FHLBs remained housing finance.  \nWhile the mission of the FHLBs has notchanged,their activities have expandedin a number of important ways.Over thepast decade,the FHLBs substantiallyincreased the size of their investmentportfolios,including their holdings ofmortgage-backed securities.In 1999,the  \n# The Evolving Role of the Federal Home LoanBanks in Mortgage Markets\n\nFHLBs'lending authority was extendedby the Gramm-Leach-Bliley Act toinclude the loans secured by smallbusiness and agricultural credits of com-munity depository institutions(currentlydefined as depository institutions withS538 million or less in total assets).To date,lending activity under thisnew authority has been trivial—only  \nS8.4billion of advances(1.72 percent oftotal advances)secured by small busi-ness and agricultural loans were out-standing on December 31,2002.  \nFrom the perspective of its traditionalhousing finance mandate,the FHLBSystem undertook a major new initiativein 1997:the direct holding of mortgageloans.Through purchases of mortgageloans from FHLB System member insti-tutions.the FHLBsjoin the ranks of thetwo other government-sponsored enter-prises that have a mission to promotehome ownership—the Federal NationalMortgage Association and the FederalHome Loan Mortgage Corporation—in promoting the secondary market formortgages.The evolution of FHLBmortgage activities took another impor-tant turn recently as the FHLB ofChicago recently received permissionto operate a new program in whichmortgage assets purchased from FHLBmembers are securitized.  \nThe public commitment to support homeownership remains strong,and expandingthe FHLBs'housing-related asset powersis consistent with that objective.But aswith other govemment-sponsored enter-prises,the FHLBs'public charters conveyupon them special treatment not affordedprivately chartered firms,providing themwith competitive advantages in themarketplace—not the least of which is the  \nJune 2003  \nThe Federal Home Loan Banks arepart of a system created by the fed-eral government to promote homeownership.This Commentary looks atnew initiatives undertaken by thesegovernment-sponsored enterprises toexpand their role in financial marketsand the attendant implications fortheir balance sheets.  \nperceived implicit govemment backing oftheir liabilities.Therefore,the continuingevolution of FHLB activities merits peri-odic review.  \n## ■ Providing Liquidity toMortgage Lenders\n\nThe FHLBs were established as a liquid-ity facility for the housing finance indus-ry.Initially,they operated as deposit-replacement facilities,making advancesto thrifts and other FHLB member insti-tutions.Thrifts would use FHLBadvances to insulate their mortgage lend-ing activi","cbCaifR4RDypIdE0","https://ap.wps.com/l/cbCaifR4RDypIdE0","pdf",1183106,"English","# The Evolving Role of the Federal Home Loan Banks in Mortgage Markets\n## Providing Liquidity to Mortgage Lenders","[{\"question\":\"What role do the Federal Home Loan Banks play in the U.S. housing finance system?\",\"answer\":\"They are part of a federal system created to promote homeownership and traditionally provide liquidity to the housing finance industry by making secured advances to member institutions.\"},{\"question\":\"How did legislation in 1989 affect FHLB membership?\",\"answer\":\"The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 opened membership to commercial banks, expanding participation from housing-focused institutions.\"},{\"question\":\"What major initiatives expanded FHLB activities beyond traditional advances?\",\"answer\":\"Over time they increased investment portfolios, adopted direct holdings of mortgage loans starting in 1997, and some FHLBs were permitted to operate programs securitizing mortgage assets purchased from members.\"}]","The Evolving Role of the Federal Home Loan Banks in Mortgage Markets | PDF",1789969414,13]