Washington, D.C. – Today, U.S. Senator Catherine Cortez Masto (D-Nev.) unveiled the Federal Home Loan Banks’ Mission Activities Act, her plan to reform the Federal Home Loan Banks (FHLBanks). This legislation would help ensure the FHLBanks are re-focused on their mission “to support housing finance and community development.”
“When Congress created the Federal Home Loan Banks in 1932, the mission was simple: help families across the United States afford a home,” said Senator Cortez Masto. “However, in the more than ninety years since, the Federal Home Loan Banks have strayed from their mission. I’ve spent years pushing them to do more to support affordable housing in our communities, and I’m proud to present this next step to make them work for every American.”
The 11 regional FHLBanks provide financing for more than 6,000 credit unions, banks, community development financial institutions, insurance companies and state housing finance agencies. These funds are meant to allow these organizations to invest more to meet the needs of their communities.
The Federal Home Loan Banks’ Mission Activities Act would re-focus the FHLBanks on their mission requirements by:
- Requiring the FHLBank system to contribute 30 percent or a minimum of $200 million of its net earnings to its Affordable Home Program and other voluntary programs that meet community needs.
- Enabling small credit unions and community development financial institutions to pledge non-housing loans as collateral and join a Federal Home Loan Bank if they only provide small business, agricultural or community economic development loans.
- Tying FHLBanks Presidents’ compensation to how well the Banks are meeting their mission of supporting affordable housing and community development.
Read the full bill text here.
Throughout her time representing Nevada, Senator Cortez Masto has made reforming the Federal Home Loan Banks a cornerstone of her work. In 2021, Cortez Masto introduced the Federal Home Loan Banks’ Mission Implementation Act, which included elements of this proposal. In Congress, Senator Cortez Masto has also highlighted the fact that Nevada has been treated unfairly by the system, and she has sought additional investment in Nevada by the FHLBank of San Francisco resulting in the first-in-the nation targeted Affordable Housing Program for the state.
Following a 2022 letter Senator Cortez Masto sent to FHFA Director Sandra Thompson, the FHFA announced a review of the Federal Home Loan Bank system. In her letter, the Senator called for a review of the FHLBanks and requested that that review consult stakeholders and outside experts to ensure the FHLBanks responsibly used their federal funding. She also asked that the review consider how FHLBanks can better support affordable housing, rural and tribal communities, income inequality, infrastructure investments, and climate resilience. In late 2023, the FHFA released a comprehensive report calling for mission-focused reform of the FHLBanks.
Last year, Cortez Masto – alongside Senators Warren (D-Mass.), Wyden (D-Ore.), Smith (D-Minn.), Baldwin (D-Wis.), Sanders (I-Vt.) and Fetterman (D-Pa.) – sent letters to each of the 11 Federal Home Loan Banks (FHLBanks) urging them to contribute at least 20% of their net income to affordable housing and other critical community grant programs. Earlier this year, the Senator secured a $10 million investment from the Federal Home Loan Bank of San Francisco into the Nevada Housing Division’s (NHD) single-family bond program.
Senator Cortez Masto is the Ranking Member of the Financial Institutions and Consumer Protection Subcommittee.
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