According to Bloomberg, US regulators are considering limiting major lenders' borrowing from FHLBs.

Reuters, 30 June - According to a broader proposal to revamp the system, U.S. officials are considering restricting the ability of large banks to use Federal Home Loan Banks (FHLBs) as a financial safety net.

According to the story, which cited people with knowledge of the situation, regulators have also talked about mandating banks that want to borrow from the FHLBs to keep a minimum amount of their assets in mortgages.

Before making the proposals public in the upcoming months, the Federal Housing Finance Agency (FHFA) may yet make changes to its plans, the report said.

FHFA continues to formulate suggestions on a number of issues, including 

enhancing the FHLBs' assistance for members who are actively contributing to housing and community development, an FHFA representative told Reuters via email.

By the end of September, a thorough report is anticipated, the representative noted.

Due to higher-than-normal demand for funds following the failure of Silicon Valley Bank (SVB) and Signature Bank (SBNY) in the United States as well as the emergency takeover of Credit Suisse, U.S. FHLBs have been bolstering their lending warchests in order to give additional liquidity to banks.

11 U.S. government-chartered organizations known as Federal Home Loan Banks raise funds for low-cost lending to their member regional banks.