Removing Barriers Blog

CUNA Comments on FHLB Membership
Posted June 23, 2020 by dyi

CUNA sent a letter to the FHFA regarding their request for input on Federal Home Loan Bank membership. CUNA has maintained their position that any potential FHLBank changes must ensure CU access and any new regulatory changes to Federal Home Loan Bank (FHLBank) membership should not negatively impact credit unions’ ability to access liquidity or obtain FHLBank membership.

“America’s credit unions benefit from being a part of the FHLBank System. FHLB-member credit unions have $1.4 trillion in total assets, making up 88% of total credit union assets,” the letter reads. “The FHLBank partnerships are important for these credit unions, as FHLBanks provide credit union members with funding and liquidity to be effective lenders in their communities.” 

Highlights of the letter include: 

  • The most important objective of the FHLBank System is that its safety and soundness be preserved to protect its members. FHLBanks should not place too much risk in its membership base, and members should be well-regulated with a regulatory infrastructure in place; 

  • CUNA supports any necessary legislative and/or regulatory changes to expressly include all credit union service organizations (CUSO) for membership.  

  • Any financial condition review requirements should be based on the risk the institutions may provide and should not be substantially similar for all applicants; 

  • The FHFA should prohibit the use of “conduits,” or ways of circumventing membership eligibility requirements, to obtain FHLBank membership; 

  • Maintaining an ongoing commitment to housing finance should be the top goal for FHLBank membership, but while CUNA understands there should be requirements for membership, it strongly believes any requirements must be flexible so credit unions are not unintentionally excluded; and  

  • CUNA supports standards that provide individual FHLBanks discretion, given that individual banks and their Boards of Directors have a more comprehensive understanding of the communities within their jurisdiction.