When it comes to the Federal Home Loan Bank system, “don’t mess with success,” wrote ABA Vice Chair Julieann Thurlow in an American Banker op-ed today. Noting that some critics have “decided to take aim” at the FHLB system and call for changes, Thurlow—whose bank, Reading Cooperative Bank in Reading, Massachusetts, is a member of the Federal Home Loan Bank of Boston—said that the 11 regional home loan banks play a “critical” role in supporting the economy with liquidity as a lender during difficult and normal economic cycles.
“Since the home loan banks are not well understood to those who don’t regularly work with them—for the last nine decades, they have been an invaluable and often behind-the-scenes partner for banks and other regulated financial institutions invested in making communities better and ensuring access to credit for all Americans,” Thurlow wrote, acknowledging the 90th anniversary of the FHLB system this year. “As member-owned and capitalized institutions, they have quietly fulfilled an essential need … no matter what economic conditions or crisis may have seized the larger economy.”
Thurlow said calls for FHLB change usually come in times of abundant liquidity, characterizing that point of view as “shortsighted” and akin to removing a home’s furnace in the summer. “When economic conditions change—as they are sure to do, member financial institutions will need the home loan banks,” she said, citing the system’s support of regional banks and their understanding of local institutions’ unique needs.