Recently, GAO released a report to the U.S. House Committee on Financial Services examining the role of the FHLBank system during recent periods of financial stress. The report found that, as of June 2025, 93 percent of U.S. banks were members of the FHLBank System, which provided a consistent source of secured loans and liquidity across banks of all sizes. While total outstanding FHLBank borrowing fluctuated between $189 billion and $804 billion from 2015 through June 2025, the report highlighted that large banks drove significant increases in borrowing during the onset of the COVID-19 pandemic and the March 2023 liquidity crisis. Despite these spikes, most banks maintained a stable reliance on FHLBank advances, and the median ratio of FHLBank borrowing to total assets remained within a consistent range, even during stress periods.
GAO’s analysis highlighted that higher FHLBank borrowing was generally associated with positive outcomes for banks, particularly small institutions with $10 billion or fewer in assets, including increased real estate lending and a lower likelihood of being flagged as “problem banks” or “failing.” The report also addressed policy considerations for potential reforms, noting that changes such as increased regulatory involvement or adjustments to loan pricing could have unintended consequences, especially for smaller banks. GAO found FHLBanks, the FHFA, and federal banking regulators have improved coordination since the March 2023 bank failures, including joint exercises and the creation of a working group to enhance interoperability with the Fed.
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