"The floods of 2008 devastated our community with some parts of Cedar Rapids considered unrecoverable. Our bank is only as strong as the community it serves and that makes us committed to rebuilding the community and getting businesses thriving again."
Gary M. Becker, Senior Vice President,
Cedar Rapids Bank and Trust
Cedar Rapids Bank and Trust
Cedar Rapids, Iowa, was among the locations most significantly impacted by the catastrophic floods along the Cedar River in the summer of 2008. Since the flood, Federal Home Loan Bank of Des Moines (FHLB) member, Cedar Rapids Bank & Trust, is helping many flood-affected individuals and businesses recover by providing financing for repair or reconstruction.
To support this effort, Cedar Rapids Bank & Trust secured $3.2 million through FHLB’s Investment Advance Program. These funds have been used to provide low rate loans, which have been primarily used by downtown businesses and building owners as they work to reopen their doors. Together, banks and communities are showing that dedication and solidarity can help overcome any disaster.
Safety and Soundness
Federal Home Loan Banks have never incurred a loss on an advance, in eight decades of existence. This record is attributed to the collateralization of all advances, conservative underwriting standards and strong credit monitoring policies. All of the Federal Home Loan Banks’ lending is fully collateralized. Additionally, if a loan in a pool of collateral is under-performing, it must be replaced. The credit profiles of members are actively monitored. Federal Home Loan Bank investments are also very safe. By regulation, they are prohibited from purchasing non-investment grade securities and nearly all of their investments are triple-A rated.
Federal Home Loan Banks are jointly and severally liable for their combined obligations. If any individual Bank would not be able to pay a creditor, the other eleven Banks are required to step in and cover that debt. This provides another level of safety and leads to prudent borrowing throughout the Federal Home Loan Bank System. In 2001, the Government Accountability Office noted, “Joint and several liability for the payment of consolidated obligations gives investors confidence that System debt will be paid.”
© , Council of Federal Home Loan Banks