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Questions |
Answers |
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What do the FHLBanks do? |
Simply,
the Federal Home Loan Banks
provide credit to over
8,000 member financial
institutions. As a safe,
reliable source of
low-cost funds, the FHLBanks strengthen
community financial
institutions, which in
turn strengthen their
communities.
The FHLBanks also
fund programs to promote
affordable housing and
economic development for
low- and moderate-income
families and
communities. Since 1990,
the Home Loan Banks have
contributed more than
$1.9 billion to help
construct or
rehabilitate 400,000
units for low to
moderate income families
and individuals. |
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How do the FHLBanks do it? |
The
Federal Home
Loan Banks raise funds
by issuing debt
instruments (bonds and
notes) in the capital
markets. Because these
instruments have "AAA"
credit ratings, the Home
Loan Banks can borrow at
very favorable rates and
terms. The Home Loan
Banks are
privately-capitalized
and do not receive any
taxpayer assistance to
operate. FHLBanks
debt is not guaranteed,
nor is it the obligation
of the U.S. Government. |
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Why do we need the FHLBanks? |
Direct
borrowing from the
capital markets is not a
viable option for many
institutions, especially
small community banks.
Likewise, raising rates
to attract deposits
often is too costly. By
providing short and
long-term funding, tools
essential for managing
liquidity and interest
rate risk, the FHLBanks enable their
members to have a
greater portion of their
assets in loans to their
communities. The Home
Loan Banks also make it
possible for members to
provide financing for
home mortgage loans that
do not conform to
secondary market
guidelines such as those
to low-income families
in rural areas. |
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Do the FHLBanks pay taxes? |
The Home
Loan Banks are not
subject to federal
income tax; however,
they are assessed 20
percent of their net
earnings a year to pay
interest on bonds sold
to recapitalize the
federal deposit
insurance system. In
addition, the Home Loan
Banks provide an annual
contribution to
affordable housing of 10
percent of net income or
$100 million, whichever
is greater. |
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What is the Federal
Housing Finance Board? |
The
Federal Housing Finance
Board, an
independent agency in
Washington, D.C., is the
regulator and supervisor
of the Home Loan Bank
System. The Finance
Board consists of a
five-director board -
one of whom is the
Secretary of Housing and
Urban Development or the
Secretary's designee.
The other four directors
are appointed by the
President and are
subject to Senate
confirmation. The
current Finance Board
directors are:
Chairman: Ronald A.
Rosenfeld
Board member: Alphonso
Jackson (HUD Secretary)
Board member: Allan I.
Mendelowitz
Board member: Alicia R.
Castaneda
Board member: Geoff
Bacino |
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What is the Council of
Federal Home Loan Banks? |
The
Council of Federal Home
Loan Banks is a
trade association
comprised of director
and officer
representatives from each of
the 12 Home Loan Banks
and is dedicated to
enhancing public
awareness and
understanding of the
Home Loan Bank System. |
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What is the Federal Home Loan
Bank System? |
The
System consists of 12
regional Federal Home Loan Banks
with over 8,000 member
commercial banks,
thrifts, insurance
companies and credit
unions. |
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How does the FHLB Des Moines
accomplish its mission? |
FHLB Des Moines:
- Supports member
needs by providing
credit at attractive
rates and by paying
a market rate of
return on their
investment in the
Home Loan Bank.
- Plays a leadership role
in meeting the housing
needs of the public through community investment and
affordable housing programs and services.
- Fosters member
profitability through
the provision of a variety of quality products.
- Purchases member housing mortgages through a shared risk program.
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