FHLBank system continues to benefit CU members, drastic changes not needed

April 2, 2023

CUNA welcomes the Federal Housing Finance Agency’s (FHFA) efforts to conduct a comprehensive review of the Federal Home Loan Banks’ (FHLBanks) operations and mission, it wrote to the FHFA Friday. The FHFA is conducting a review of the FHLBank system.

“Credit union members continue to derive significant benefits from credit union membership in the FHLBank system. Credit union members continue to rely upon credit unions for their financial needs, including, but not limited to, the refinancing, renovation, or acquisition of their homes, particularly during times of market distress, as seen during the COVID-19 pandemic and the current economic climate riddled with inflation,” the letter reads. “

CUNA believes that, while improvements to any process can be made over time, the FHLBank system is “not in need of any drastic overhauls.”

Opportunities for improvement include modernization of FHLBank technological systems and user interfaces, improvements to delivery and reporting processes, and programmatic changes to improve flexibility and ease of the Affordable Housing Program.

CUNA also noted its concern with potential changes that would could threaten credit unions’ access to liquidity, including limitation on the use of advances, tiered membership, and an ongoing housing asset level test that would exclude Mortgage Backed Securities.

“CUNA understands the concerns regarding the appropriate nexus between FHLBank activity in general and the housing affordability and community development missions of the FHLBank system,” the letter reads. “However, the ideas raised to address that nexus appears short-sighted from the credit union perspective. Credit unions have a more consultative approach with their members, who are more than twice as likely to report that they received personalized financial education or counseling. This holistic approach to members’ financial well-being pays off.”