Lehman Brothers Collection - Contemporary Business Archives

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Lehman Brothers Collection

Twentieth-Century Business Archives

Federal Home Loan Banks - Lehman Brothers Collection

Federal Home Loan Banks

List of Deals

The Federal Home Loan Bank System was established in 1932 to provide a reserve banking system for thrift institutions and the housing finance industry.

As early as 1918, proposals were first made to establish a nationwide facility to enable savings and loan institutions to use their mortgage holdings as a basis for credit. In fact, the U.S. housing shortage immediately after World War I was largely attributed to the lack of available funds. The prosperity of the twenties obscured the basic problems in home finance. However, in the early 1930s the deepening economic depression brought them into the open once again.

Congress passed the Federal Home Loan Bank Act of 1932, which was signed into law by President Herbert Hoover. Within two years, further legislative steps were taken to bolster the U.S. residential financing structure. As part of the Home Owners' Loan Act of 1933, the Federal Home Loan Bank was given the authority for chartering federal savings and loan associations. In 1934 Congress established the Federal Savings and Loan Insurance Corporation to insure bank deposits. This was placed under the control of the Federal Home Loan Bank.

From the 1930s until 1970, the Federal Home Loan Bank System evolved into a system composed of three parts: (1) the member institutions, which grew from 3,864 in 1940 with assets of $5 billion to 4,649 in 1970 with assets totaling $183.7 billion; (2) twelve Federal Home Loan Banks operating in various geographical districts that covered all of the United States as well as Guam, Puerto Rico, and the Virgin Islands; and (3) the Federal Home Loan Bank Board. The board is the federal governmental agency established to direct and supervise the operations of the bank system.

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