Banking and Finance Law Daily Wrap Up, GOVERNMENT SPONSORED ENTERPRISES—Community bankers tout Federal Home Loan Banks for housing affordability policy, (Jan 27, 2026)
Organizations Mentioned:Federal Housing Finance Agency | Independent Community Bankers of America | Urban Institute
By Jonathan Anderson
Citing new research, the trade group called on policymakers to build on the success of FHLBanks to help make housing more affordable.
The Independent Community Bankers of America (ICBA) is promoting new research that indicates a strong association between Federal Home Loan Bank (FHLBank) advances and increased lending by banks and credit unions. The study, released by the Urban Institute, suggests that advances by FHLBanks expand total lending by between $75.6 billion and $97.3 billion per year. In touting the findings, the ICBA argued that policymakers should build on the success of FHLBanks as they look for ways to make housing more affordable.
Background. The FHLBank System was created in 1932 and provides liquidity to about 6,500 member banks, credit unions, insurance companies, and community development financial institutions. The system of wholesale lending institutions provides “additional funding to community banks, enabling them to support projects that would otherwise be out of reach due to lending limits or the size of their deposit base,” according to the ICBA. Each of the FHLBanks is prudentially regulated by the Federal Housing Finance Agency and is governed by a regional board of directors.
New study. On Jan. 13, 2026, the Urban Institute released a research report entitled “The Value of the FHLBank System to Promote Housing and Community Development Lending.” Drawing data between 2002 and 2024, the report examines how advances by FHLBanks affect total lending and lending for housing, small businesses, agriculture, and community development.
The report identified five major findings: (1) advances by FHLBanks are strongly associated with higher levels of lending; (2) residential real estate had the strongest lending responses; (3) advances help small businesses, small farms, and community development efforts; (4) credit unions tend to lend more when using advances after joining the FHLBank System; and (5) advances contributed major growth to the cumulative lending by banks and credit unions in the period under study.
ICBA response. On Jan. 23, 2026, the ICBA published a blog post calling attention to the new Urban Institute report, which the ICBA said “confirm[s] the benefits to local communities and the national economy provided by the FHLBanks.” The ICBA also cited an earlier study by the Urban Institute that estimated FHLBanks generate up to $21.4 billion in annual economic value.
“These studies are clear: the funding provided by the FHLBanks to Main Street lenders makes a difference—a big difference—in local communities,” the ICBA said. “This has been true for over 90 years, and community banks’ relationship with the FHLBanks is stronger than ever.”
The blog post concluded by calling on policymakers who are reexamining housing finance and looking for ways to make housing more affordable to build on the success of the FHLBank System.
Companies: Independent Community Bankers of America; Urban Institute
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