Housing has become increasingly unaffordable, as rising rents and home prices have far outpaced the growth of incomes over the last decade. The United States is still short around four million homes (not quite 10 million, as this Administration has alleged), with the lowest-income renters facing even greater housing needs. Tackling this housing crisis has emerged as a bipartisan priority. The Senate and House each have passed bipartisan housing bills focused on modernizing existing housing programs and boosting supply: efforts that the Consumer Federation of America (CFA) wholeheartedly supports. The White House also recently released an Executive Order (EO) called “Promoting Access to Mortgage Credit.” This EO mostly laid out a harmful deregulatory agenda that would undermine long-standing consumer protections that have made mortgages and the financial system safer. At the same time, in this EO, the White House recognizes one of CFA’s key advocacy priorities: the trillion-dollar government-sponsored Federal Home Loan Bank (FHLBank) System can and should do much more to tackle our housing crisis. 

This blog offers background on the Congressionally-chartered FHLBank System and explains how Congress can unlock multiple billions of dollars for housing supply and affordability every year, all without requiring any additional taxpayer dollars and without compromising the safety and soundness of our housing system.

A Government-Sponsored Enterprise that Turned from Housing to Private Profits

The FHLBank System is a system of 11 regional banks, which serve a membership of around 6,400 banks, credit unions, insurance companies, and community development financial institutions (CDFIs). Congress founded this institution during the greatest housing crisis of the last century, the 1930s Great Depression, to help encourage mortgage lending and homeownership. Due to their status as a government-sponsored enterprise (GSE), the FHLBanks can borrow cheaply at rates close to the U.S. Treasury and they pass the vast majority of this subsidy on to their members in the form of generous dividends and low-cost loans (called “advances”). When the system was created, member institutions had to pledge mortgage loans as collateral for the advances, creating a direct tie to affordable homeownership. Over time, this requirement has been loosened such that even highly liquid mortgage-backed securities (MBS) may be used as collateral, making the connection between advances and housing much more tenuous. For example, a recent report by the U.S. Government Accountability Office (GAO) found that every $1,000 that FHLBanks lend to banks is associated with only $11 in residential real estate lending, while their lending to the largest banks and insurance companies is associated with no housing benefits at all.   

The Congressional Budget Office estimates that the FHLBanks benefit from around $7.3 billion each year in government subsidies. These subsidies are not appropriated by Congress but rather flow from the System’s unique benefits as a government-sponsored enterprise (GSE). The most significant GSE benefit is the “implicit guarantee,” which is based on investors’ perception that the U.S. government will never let these institutions fail. As a result, GSE status enables the FHLBanks to raise funds in capital markets at rates close to that of Treasuries, and they receive the same credit ratings as the United States. 

While Congress founded the FHLBanks in order to boost access to affordable liquidity in U.S. housing markets, the System has strayed from this public mission in recent decades. The majority of FHLBank members do not even originate mortgages anymore – including a growing number of insurance companies that are members – and only about half of members even borrow advances in any given year. Indeed, rather than boosting housing, many bank members have simply turned to FHLBank advances as a balance-sheet management tool, such as to “bridge funding gaps and counter deposit outflows,” while insurance companies are using FHLBank advances and generous FHLB dividends to enhance investment returns and boost their profits. This is far from the purpose that Congress intended when it created this housing system. 

In recent years, the System has started to allege that the main purpose of the FHLBanks is to provide liquidity for its own sake – disowning its own connection to housing – and has argued that it supports small banks throughout the economic cycle. However, the reality is that the System is not set up for small banks: the vast bulk of its advance lending and dividends go to Wall Street, not Main Street. For example, the GAO found that despite representing only about 3 percent of active FHLBank members, large banks held on average nearly 74 percent of outstanding FHLBank borrowing since 2015. Large insurance companies, including those owned by private equity companies such as Apollo Global Management, also are scooping up a growing share of advance dollars: in 2025, 26 percent of all advances went to insurance companies (up from 22 percent in 2024), even though they have no relationship to housing. 

It is much overdue that the White House, Congress, and the Federal Housing Finance Agency (FHFA) hold the System accountable to its housing mission, and to getting fair return on the over $7 billion in annual taxpayer subsidies. 

Bringing a GSE Back to its Public Purpose: Recommendations for Congress

To tackle our nation’s housing crisis and build more housing, housing finance access is critical: affordable finance, including for acquisition, development, and construction loans, is increasingly a stumbling block for housing developers. The FHLBank can play a key role in supporting housing needs, while more efficiently allocating the taxpayer subsidies that are embedded in this GSE. Congress has already shown an appetite for bipartisan action on housing. As a next priority, they should turn to the future of the GSEs, which includes the Federal Home Loan Bank System. 

CFA’s top 3 recommendations to Congress include: 

1. Raise mandatory housing contributions from 10 percent of net income to a minimum 30 percent contribution of net income every year. Currently Congress requires FHLBanks to devote at least 10 percent of their annual net earnings to its Affordable Housing Programs (AHP), which supports low-income housing construction and down payment assistance: this 10 percent floor was conceived in 1989, during a time of great financial stress for the FHLBanks, when they also had to pay an additional 20 percent of net income to the U.S. Treasury every year to fulfill their REFCORP debt obligations. The FHLBanks paid off these debt obligations in 2011, but the floor for housing contributions was never raised. It is long overdue for Congress to modernize this minimum. Raising the minimum from 10 to 30 percent housing contributions annually, would help invest an additional $1.2 billion in housing every year, all without costing taxpayers any additional dollars and without compromising safety and soundness.

2. End insurance company membership in the FHLBank System, in particular for private-equity owned insurers. Taxpayer-subsidized loans meant for housing should not be deployed as a “yield enhancement” investment tool for insurance companies. Insurance companies are legacy members of the FHLBank System as they used to be mortgage lenders back in the 1930s: Congress should end this outdated membership eligibility. Private-equity owned insurance companies have also introduced undue and opaque risk in the FHLBank books. Ending insurance companies’ membership would also help the FHLBanks to focus on their most mission-aligned members, such as CDFIs and small banks, and direct staffing and programming resources to better serve their needs.

3. Require every FHLBank to expand their Community Investment Program (CIP) and Community Investment Cash Advances (CICA) programs, which offer FHLBank-subsidized loans for activities that are explicitly related to housing and community development. The EO on mortgage access suggests creating FHLBank programs to support mortgage and construction liquidity, but some of these programs already exist. Currently, CIP and CICA remain highly underdeveloped and underused, despite being able to provide much-needed dollars for affordable housing construction and community development needs. For example, in 2025, the FHLBanks extended $5.3 billion in lower-cost CIP advances: meaning that they still represented less than 1 percent of all advances ($677 billion in 2025). While CIP is statutory and CICA is voluntary, not all FHLBanks have a robust CICA or CIP program: leaving a lot of room for growth across the system. These programs can also support CDFIs in accessing much-needed capital, to help them scale up their important work. Congress should intervene to help expand the CIP impact, while making CICA statutory, and modernizing both programs to truly meet the housing and community development needs of this moment.

In 2026, CFA will publish a series of blogs on the Federal Home Loan Bank System, including to debunk common misconceptions, share the latest financial numbers, and highlight how this trillion-dollar government-sponsored enterprise can do more to tackle our housing crisis. Previous blog(s) in this series are:

Private Equity is Gobbling Up Subsidized Housing Loans: Consumers and Workers Beware