NEAM Insights

Recent banking turmoil has thrust the Federal Home Loan Bank (FHLB) into the headlines again highlighting its role as “lender of next to last resort” and provider of liquidity to financial institutions including commercial banks, insurance companies, savings and loan institutions (thrifts), credit unions, and community development financial institutions. In March 2023, significant bank deposit outflows contributed to the failures of Silicon Valley Bank on March 10 and Signature Bank on March 12, marking the second and third largest bank failures in U.S. history, with combined assets in excess of $300 billion. First Republic Bank followed on May 1, 2023 with $229 billion in assets.1 Read More

In previous writings,1 NEAM has called the insurance industry’s attention to the FHLB program. The benefits of the program are numerous and in these uncertain times, even more relevant. Insurance companies’ invested asset pools are not immune from the financial crisis being inflicted by social distancing measures taken to stem the spread of COVID-19. In times of market stress, characterized by increased volatility and declining asset prices, the ability to source another avenue of capital (albeit secured) without having to sell assets into dislocated markets can be advantageous. Read More