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The Banking System's Guardian Angel You've Never Heard Of | Michael Ericson & Dan Siciliano on Federal Home Loan Banks
Aug 18, 2023
Michael Ericson and Dan Siciliano discuss the Federal Home Loan Banks (FHLBs), their role in the banking system, and the declining advances from FHLBs to US banks. They talk about the FHLB's mission, capitalization, implicit government guarantee, and their support for affordable housing. They also discuss liquidity pressures in the banking system and how FHLBs manage interest rate risk.
01:34:34
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Quick takeaways
- Federal Home Loan Banks (FHLBs) provide a stabilizing role in the financial markets and offer essential liquidity during normal and crisis times.
- FHLBs have lent significantly more to banks compared to the Federal Reserve, showcasing their crucial role in providing funding to banks.
Deep dives
The Role of Federal Home Loan Banks in the American Banking System
Federal Home Loan Banks serve a critical role in providing funding and liquidity to member institutions, including commercial banks, credit unions, and insurance companies. They are member-owned cooperatives that support specific geographic districts. They play a stabilizing role in the financial markets and provide essential liquidity during both normal and crisis times.
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