Liquidity is at a record low for many banks.
The new classes of collateral will provide significant relief if the values for the collateral are set correctly. Agriculture and small business loans present a comparable risk profile to one to four family mortgage loans. Discussion of your bank s experience with agriculture and small business loans will help your FHLBank become more comfortable with this type of lending. The long term viability of the Federal Home Loan Bank System depends upon banks ability to use this new funding mechanism. Without additional sources of collateral, banks will look outside the System to seek funding elsewhere.