For decades, credit unions have been a pillar of financial inclusion, helping families achieve homeownership, supporting small businesses, and fostering economic resilience in communities nationwide. A newly released study by the Filene Research Institute reinforces what many have long understood: membership in the Federal Home Loan Bank (FHLBank) System is a powerful tool that enhances credit unions’ ability to fulfill their mission.
The research examines 30 years of data and finds that credit unions that join the FHLBank System experience significant growth in lending, total assets, and financial flexibility—all while maintaining sound risk management. These findings underscore the crucial role that FHLBanks play in providing liquidity to their members—liquidity that enables credit unions to expand mortgage lending and strengthen community investment.
One of the study’s most compelling takeaways is the impact on smaller credit unions—institutions that often face the greatest challenges in accessing capital and sustaining growth. The research shows that after joining the FHLBank System, smaller credit unions saw notable increases in lending and assets. Importantly, they were also more likely to participate in the secondary mortgage market, allowing them to manage interest rate risk while continuing to serve members.
These insights should inform ongoing policy discussions about the future of the FHLBank System. It is essential for policymakers and regulators to recognize the unique value of the FHLBanks in ensuring a stable financial system that benefits consumers. They are more than just a liquidity backstop—they are a critical enabler of credit unions’ ability to finance homeownership, small business expansion, and economic mobility.
Having spent 15 years as Chief Advocacy Officer for the Credit Union National Association and now serving as President and CEO of the Council of Federal Home Loan Banks, I have seen firsthand how access to FHLBank liquidity empowers credit unions to better serve their members. These institutions exist to support people, not profits, and the FHLBank System amplifies their ability to do just that.
The study’s findings confirm that membership in a FHLBank helps credit unions thrive without compromising their commitment to responsible lending. They remain well-capitalized, experience no significant increase in delinquencies, and continue to prioritize financial security for their members. This aligns with the FHLBank System’s founding mission—to provide reliable liquidity to institutions that support housing and community development.
While the Filene research focuses on credit unions, it is highly likely that the same benefits of FHLBank membership extend to community banks as well. Like credit unions, community banks play a vital role in local economies, providing essential financial services to families and small businesses. The FHLBank System offers community banks the same access to stable, low-cost funding, enabling them to expand lending, manage liquidity, and contribute to economic growth. Ensuring continued access to the FHLBanks for both credit unions and community banks is critical to maintaining a strong and diverse financial system that serves all Americans.
At a time when housing affordability and economic opportunity remain pressing challenges, the FHLBank System’s role in supporting their members—credit unions, banks, insurance companies and CDFIs—has never been more vital. Let’s ensure this proven model of cooperative finance continues to empower local lenders and the millions of Americans they serve.
