Sen. Sherrod Brown, D-Ohio, chairman of the Senate Banking Committee, pressed Federal Housing Finance Agency Director Director Sandra Thompson on the
Brown's letter comes after the failures of Silicon Valley Bank and Signature Bank, as well as the collapse of
"The FHLBank System was created to provide liquidity to sound institutions to facilitate lending. It was not structured to be a lender of last resort – or of next-to-last resort – for struggling institutions," Brown said in the letter. "If FHLBank members attempt to use the system as a financial backstop, it could have unintended consequences for the FHLBank System and for our broader financial system."
Brown asked that Thompson, as part of a
The ability of the system to extend liquidity to banks at all times "raises concerns that members may attempt to draw on the system when they are experiencing financial instability or insolvency," according to the letter.
Because of the advances to failed banks, among other instances of the Federal Home Loan Banks extending liquidity to troubled institutions, critics have called for more oversight of the banks, even calling the system