Comment Detail

Comment

We have been a long term partner with FHLB Topeka, and I use the term partner with intentionality. The FHLB has been a partner to us not only in terms of liquidity facilitation but safekeeping, collateral management and helping us with customized solutions to enable our business as a depository. It is particularly apropos to highlight the benefits of the FHLB system in light of recent market developments following the failures of SVB and Signature Bank. Prior to these occurrences, the FRB system was there as a 'lender of last resort,' which, while a vital function, does not provide our institution with the same partnership relationship.

The FHLB has always stressed and educated depositories in terms of prudent risk management and has constantly innovated liquidity solutions to aid in risk management. In addition, the FHLB facilitates gatherings of its member institutions in very valuable and instructive educational events, again with a focus on managing risk. These gatherings also provide a cooperative environment for member institutions to share their experience and facilitate greater cooperation and knowledge sharing. In short, the FHLB system highlights the benefits of a 'cooperative' based system in which all participants' incentives are aligned perfectly around safe and sound risk management processes.

Finally, with the FHLB system being primarily a collateral based lender, their continued focus on updated market and credit risks around various classes of collateral provide an invaluable positive feedback loop to member depositories in terms of asset quality. In my view, the FHLB system not only enables smooth functioning of the member financial institutions but also does so with a continued emphasis on prudent risk management to avoid the types of situations that we have recently seen occur.