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Comment

I was most troubled to see a former independent board member of the FHLB system denigrating the work of the local bank whose role is maintaining liquidity and access to credit. Dr. Cornelius Hurley suggests that the bank should consider extending access to lightly capitalized and lightly regulated mortgage companies and fintechs.
I provided a written rebuttal in the form of an Op ed in the American Banker, so I will not repeat myself, but there was one pertinent argument that I failed to raise and is obvious in the shadow of this pandemic.

The strongest argument in favor of the current mission and purpose of the FHLB system was demonstrated in 2019 when the Federal government flooded the economy and the banking system with PPP funding, Employee Retention Tax Credits and Stimulus. Consumers and businesses shocked by the breadth of the crisis parked the funds in local institutions as they pulled back on spending. Bank's paid down and prepaid borrowings at levels not seen in prior crises. As a funder of credit and liquidity for banking system, no private institution could have withstood the liquidity fluctuations as well as the FHLB system. Demonstrating their value and resilience.

In addition to liquidity, the FHLB system acquired residential mortgage loans from their members allowing community banks and credit unions to meet their customers needs while avoiding margin crushing long term rates and asset liability risk on their balance sheet.

The FHLB system has a right to celebrate their 100 years of providing liquidity and support for its members, the benefit of which flows to consumers and communities in the form of low long term rates and readily accessible home purchase funding.