Statement for the Record before the House Financial Services Subcommittee on Housing and Insurance on the hearing, "Oversight of the Federal Home Loan Bank System"

The American Bankers Association (ABA) appreciates the opportunity to submit this statement for the record regarding the Federal Home Loan Bank (FHLBank) System and its critical role in supporting the nation's housing finance system, banks' community development efforts, and the safety and soundness of financial institutions.

Representing banks of all sizes and charters across the country, ABA's members rely on the FHLBanks as a dependable source of liquidity and funding that allows them to serve households, businesses, and communities in every economic environment. The FHLBank System has been a cornerstone of the U.S. financial system for more than 90 years and remains uniquely positioned to support local lending and economic growth through its member-focused cooperative model.

A Reliable Source of Liquidity

At its core, the FHLBank System fulfills an essential liquidity mission. Member institutions depend on FHLBank advances to manage a wide range of funding needs, including supporting mortgage lending, responding to shifts in deposit flows, managing interest-rate and liquidity risk, and maintaining credit availability during times of economic stress.

The value of the System is most evident during periods of market disruption. When other funding sources become constrained or more expensive, the FHLBanks provide secured, predictable access to liquidity. This reliability strengthens the resilience of community, regional, and larger banks alike, enabling them to continue serving customers and supporting local economies.

The FHLBanks do not compete with private-sector funding markets; instead, they complement them by providing an important backup source of liquidity that enhances the overall stability of the financial system. For many community banks, access to FHLBank advances is a critical tool that allows them to maintain lending capacity and meet the needs of consumers, small businesses, farmers, and local governments.

Download the statement for the record to read the full text.