Washington, D.C. – U.S. Senator Catherine Cortez Masto (D-Nev.) introduced legislation to require the eleven government-sponsored Federal Home Loan Banks (FHLBanks) to increase their investments in affordable housing, community development, and small business lending. The FHLB system was created during the Great Depression with the explicit mission of supporting vibrant community economies, affordable housing, and other development projects, but the FHLBanks have not fully invested to meet this mission requirement. In the wake of the COVID-19 pandemic, this mission is even more critical, and Cortez Masto’s Federal Home Loan Banks’ Mission Implementation Act directs the FHLBanks to do more to fulfill their mission to meet the affordable housing and community economic development needs of the communities they serve. Companion legislation has also been introduced in the House of Representatives by Congressman Ritchie Torres (D-N.Y.-15).
“The Federal Home Loan Banks are an important source of support for housing and economic development in our communities, but they could be doing much more, especially at a time when so many in Nevada and across the country are hurting,” said Senator Cortez Masto. “I’m proposing legislation that would require the Banks to increase their support of affordable housing, help tribes in Nevada and across the nation, invest in community development programs to support small businesses and revitalize local economies, and fund local infrastructure projects. I’ll continue working in the Senate to make sure we can recover fully from this devastating pandemic.”
“We have to use all of the tools at our disposal to ensure the housing market recovers from the pandemic and operates equitably,” said Representative Torres. “The Federal Home Loan Banks play an important role in our housing finance and community lending system. This bill ensures that the banks fulfill their critical mission to invest in our communities, and will double their support for affordable housing which is desperately needed in cities where housing prices continue to skyrocket. I look forward to working with my House and Senate colleagues to advance innovative ideas and policies like this new legislation to lift up families across the country and grant a pathway to home ownership.”
The 11 regional FHLBanks provide financing for more than 6,000 credit unions, banks, community development financial institutions and state housing finance agencies, which allows these organizations to invest more to meet the needs of their communities.
The Federal Home Loan Banks’ Mission Implementation Act would:
- double the FHLBanks’ investment in affordable housing through the Affordable Housing Program (AHP), an initiative that has been successful but lacks enough funds to meet demand;
- include a 2% set-aside for tribal communities from each FHLBank’s AHP and community development program to support development in these communities;
- create a new community economic development grant program to create jobs in low-income communities;
- increase the ability of the FHLBanks to invest in small business loans guaranteed by the Small Business Administration;
- allow the FHLBanks to serve as a secondary market for community development financial institutions that make small business and community development loans;
- make other changes to permit the FHLBanks to support their member institutions in investments in small business and state and local priorities.