The 12 Federal Home Loan Banks are the only way most of community financial institutions can access the global capital markets. Structured as cooperatives, their customers are also their owners, fostering conservative management and a long-term view of financial performance.

Capital Position

FHLBanks are uniquely self-capitalizing. No taxpayer funds are involved in the operation of the Federal Home Loan Banks. To become a member of a Federal Home Loan Bank, financial institutions must purchase stock in the Bank. All shares have a statutory par value of $100. When a member needs to access advances, it must not only pledge high-quality collateral, but purchase additional activity-based stock in proportion to their borrowing. During times of high advance activity, capital automatically increases. As advances roll off the books of the Federal Home Loan Banks, capital is reduced accordingly. In 2011, the Federal Home Loan Banks went further by launching the System Capital Initiative to boost their ability to protect members, investors and taxpayers against the potential of any future losses.

The Basics

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