Federal Home Loan Banks (FHLBs or Banks) are a fascinating, if arcane, set of creatures
in the menagerie of organizational types that make up the apparatus of public administration in
the United States in the twenty-first century. They were established by Congress in 1932 to
support home ownership through the structure of the financial system. In the 1990s, they took
off on a dramatic growth trajectory that elicited alarmed public statements from national policy
makers in the executive branch (Rubin 1998) and Congress (Leach 1995) along with criticism in
the business press (Silverman 1998) charging that the System had run amok and was growing
willy nilly with no public purpose.
We had each studied domestic policy making around financial institutions (Cassell 2002;
Hoffmann 2001) and this controversy caught our attention. We started to inquire into policy
change in the Federal Home Loan Bank System, beginning with the question of how leaders in
the System – FHLB executive managers and board members – viewed their organizations’
purpose. We found three clear missions among the Federal Home Loan Banks: While some
retain a focus on the System’s original homeownership finance mission, others now view their
institutions’ central purpose as supporting the viability of small community financial institutions
(commercial banks and savings and loan associations), and still others see their mission as
promoting place-based housing and community development to improve communities and
neighborhoods as their institution’s central purpose (Hoffmann and Cassell 2002).
We use the opportunity of this conference paper to grapple with this third view, which we
named the “housing and community development mission.” What does this mission mean?
Why and how did it take hold? After a brief primer on the FHLB System, we address these
questions in four sections. The first section describes the meaning of the new housing and
community development mission from the point of view of leaders in the FHLBs. The second
and third sections focus on Congress’s role in the mission expansion that occurred; we argue that
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Convention