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Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper
The Federal Home Loan Bank System: the lender of next-to-last resort?
Adam B. Ashcraft
Morten L. Bech
W. Scott Frame
Abstract

The Federal Home Loan Bank (FHLB) System is a large, complex, and understudied government-sponsored liquidity facility that currently has more than $1 trillion in secured loans outstanding, mostly to commercial banks and thrifts. This paper first documents the significant role played by the FHLB System at the outset of the ongoing financial crisis and then provides evidence about the uses of these funds by their bank and thrift members. We then identify the trade-offs faced by FHLB member-borrowers when choosing between accessing the FHLB System or the Federal Reserve's discount window during the crisis. We conclude by describing the fragmented U.S. lender-of-last-resort framework and finding that additional clarity about the respective roles of the various liquidity facilities would be helpful.


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Adam B. Ashcraft & Morten L. Bech & W. Scott Frame, The Federal Home Loan Bank System: the lender of next-to-last resort?, Federal Reserve Bank of Atlanta, FRB Atlanta Working Paper 2009-04, 2009.
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Keywords: Federal home loan banks ; Lenders of last resort
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