FEDERAL

educe the principal balance of Treasury’s investments
in the enterprises. 46
Additional Government Support
The enterprises also benefited from extraordinary
government measures to support the housing market
overall. Since September 2008, the Federal Reserve
and Treasury have purchased more than $1.3 trillion
in enterprise MBS, and the Federal Reserve has
purchased an additional $135 billion of bonds issued
by the enterprises. 47 The Federal Reserve became the
predominant purchaser of MBS during its purchase
programs, and its purchases helped to prime the
nation’s housing finance system. 48
As of the second quarter of 2013, the enterprises
currently do not require additional government
support. Treasury’s last purchase of enterprise MBS,
through the GSE MBS Purchase Facility, was
in December 2009, and the Federal Reserve last
purchased MBS and bonds from the enterprises in
March 2010. 49
FHLBank System
The FHLBanks are GSEs, federally chartered but
privately capitalized and independently managed.
The 12 regional FHLBanks together with the Office
of Finance, the fiscal agent of the FHLBanks,
comprise the FHLBank System. All FHLBanks
operate under the supervisory and regulatory
framework of FHFA. 50 FHFA’s stated mission with
respect to the FHLBanks is to provide effective
supervision, regulation, and housing mission oversight
to promote the FHLBanks’ safety and soundness,
support housing finance and affordable housing, and
facilitate a stable and liquid mortgage market. 51
The FHLBank System was created in 1932 to improve
the availability of funds for home ownership and
its mission is to provide local lenders with readily
available, low-cost funding to finance housing, jobs,
and economic growth. 52 The 12 FHLBanks fulfill
this mission by providing liquidity to their members,
resulting in an increased availability of credit for
residential mortgages, community investments, and
other housing and community development services. 53
The FHLBanks are cooperatives that are owned
privately and wholly by their members. Each
FHLBank operates as a separate entity within a
defined geographic region of the country, known as its
district, with its own board of directors, management,
and employees. Each member of an FHLBank must
purchase and maintain capital stock as a condition
of its membership. 54 FHLBank members include
financial institutions such as commercial banks,
thrifts, insurance companies, and credit unions. 55
Figure 16 (see page 46) provides a map of the districts
of the 12 FHLBanks.
The primary business of the FHLBanks is to raise
funds in the capital markets by issuing debt, known as
consolidated obligations, through the Office of Finance
and to use the consolidated obligations to provide
their members with loans, known as advances. 56 The
interest earned on advances less the interest owed on
consolidated obligations is the FHLBanks’ primary
source of earnings. 57
In the event of a default on a consolidated obligation,
each FHLBank is jointly and severally liable for
losses, which means that each individual FHLBank
is responsible for the principal and interest on all
consolidated obligations issued by the FHLBanks. 58
However, like the enterprises, the FHLBank System
has historically enjoyed benefits (e.g., debt costs akin
to those associated with Treasury bonds) stemming
from an implicit government guarantee of its
consolidated obligations. 59
The FHLBanks’ Combined Financial
Performance
The regional housing markets affect the FHLBanks’
demands for advances from member institutions
Semiannual Report to the Congress • April 1, 2013–September 30, 2013 45