Logo of Federal Home Loan Bank Board

Federal Home Loan Bank Board

The Federal Home Loan Bank Board was an independent regulatory agency formed during the Great Depression in order to lower the cost of home ownership. Under the 1932 law, the Bank Board was charged both with establishing regional FHLBs (like the one in San Francisco relevant to the Keating Five) as well as chartering and overseeing S&Ls. FHLBs were created to provide reliable capital to S&Ls and other types of community development financial institutions, the idea being their government-backed stability would lead to lower costs for would-be homeowners. Congress dissolved the FHLBB in 1990, reconstituting its oversight of the FHLBs and other roles into a new administrative structure following the S&L crisis. This structure was again revised by Congress in 2009 following the onset of the Great Recession.

The FHLBs continue to exist today. While government-sponsored, they are privately-held enterprises owned by the member institutions they provide liquidity to. As a condition of receiving funds, the FHLBs regularly audit their members to ensure their solvency. (Since an FHLB is a cooperatively-owned business, every member has an interest in all others’ ability to stay afloat). The study of an institution’s solvency is also known as a “bank exam,” which the FHLB-SF undertook on Lincoln S&L.