The Federal Home Loan Banks comprise of 12 government-sponsored banks in the United States, which offer cost-effective, stable funding for financial intuitions in the country. This article will provide facts on the banks.
The banks provide funds for home mortgage loans, the rural and agricultural industry, small businesses and lending to aid economic development. It is the largest source of collective credit for home mortgages and communities in the United States.
Facilitate the financing of lending schemes It was chartered by the US Congress in the 1930s, with its key mission to provide financial companies, with products and service that would facilitate the financing of lending schemes for houses and communities. The 12 individual banks of the Federal Home Loan Banks are governed by member financial companies, including credit unions, commercial banks and insurers. Cheap secured borrowings One of the key benefits of a membership with the FHLBanks is that people are able to access cheap secured borrowings (advances) that are funded on behalf of the banks themselves. The fiscal agent of FHLBanks is the Office of Finance, which is responsible for administering consolidated obligations (the issuing of term debt of discount notes).
The 12 banks are owned by more than 7,800 financial institutions from every state in the United States. They represent every US possession and territory and all institutions are required to buy stock, before they can be accepted as a member.
Members generally aim to raise their borrowing by purchasing more stock, which will support future activities. The banks also benefit from exemption from local income and state taxes, however they are registered for property tax.
Resolution Funding Corporation
The banks currently pay in one fifth of annual earnings in order to fund the Resolution Funding Corporation, and ten percent of annual earnings to the affordable housing programmes.
Improvement in housing and communities The key mission of FHLBanks is to encourage the improvement of access to housing, helping communities by issuing credit for its members. Aside from the tax relief, the banks do not benefit from any tax-payer funding.
Meanwhile, the Office of Finance of FHLBanks recently reported a net income of around 358 million US dollars in the first quarter of 2011. The banks also contributed around 41 million US dollars to affordable housing for the same period.