I recently read a new book called “Same as Ever,” which has a unique twist to the typical management book. The thesis is that it’s much more important to study the things that never change instead of spending time trying to predict the future. 

For example, Amazon founder Jeff Bezos says he’s often asked what’s going to change in the next ten years, but he almost never gets the question: “What’s not going to change in the next 10 years?” And he believes the second question is more important. In his business, it’s impossible to imagine a future where Amazon customers don’t want lower prices and fast shipping. And so, he puts enormous investment into those unchanging customer desires. 

As we enter a new year with a new administration taking shape, it’s tempting to relax and miss the lessons of the book for the FHLBank System. Under the Trump administration, FHFA Director Sandra Thompson, architect of the “FHLBank System at 100” Report, will likely be asked to resign. Pending regulatory actions may be put on hold. Some efforts may not be dead, as some initiatives have months of momentum behind them, but we hope many of the detrimental efforts will become dormant. 

But putting aside what looks like good news, what are the almost universal truths when it comes to the FHLBs? Here are three of my thoughts along with a conclusion on where to invest our efforts. These views are mine alone and not the official position of the FHLBank System. 

First, I think we can count on the universal truth that many in regulatory positions over the FHLBs will want to be generous with our money. The most egregious example I saw of this tendency in 2024 was a stern letter from the Deputy Secretary of the Treasury. By law, the FHLBanks contribute 10% of income to affordable housing. The Deputy Secretary strongly suggested this be increased to 20% and, most shocking, suggested the banks collectively contribute $20 billion of capital over their regulatory minimums to a Department of Treasury housing slush fund. 

Fortunately, the FHLBanks pushed back on this outrageous pressure. The System as a whole had already voluntarily contributed more than 15% of net income the last two years. FHLB Des Moines led the way in innovative efforts helping communities in Montana with programs such as the Member Impact Fund and a mortgage rate buydown. Unsurprisingly, we kept the $20 billion of capital over regulatory minimums as a prudent risk-absorbing cushion for the System. Apparently, that capital looked like an easy target. But we said no. 

Second, I think we can count on some regulators not understanding our business. I began my career at age 22 as an OCC examiner. I still cringe thinking about how I must have terrorized some community banks, pretending to know the business and making suggestions to seasoned bankers. But that was relatively harmless compared to the damage regulators can do in tinkering recklessly with the FHLB mission. The misguided efforts last year to “reform” the FHLB System when it is not broken or in need of reform validate the second universal truth. 

The FHLBanks’ rock-solid reputation and mission as a reliable provider of liquidity for financial institutions felt under attack last year. Misguided notions were discussed about moving the FHLBanks away from just strict collateral standards and introducing additional risk-based consideration for extending advances. Or, the suggestion of policing members’ compliance programs before approving advances shows just how disconnected the regulators behind those suggestions are from the core business of the FHLBanks. 

Finally, on a more positive note, the FHLBs will always be a critical and reliable source of liquidity for member institutions. In spite of the dynamic environment last year that generated numerous bad ideas to reform the FHLB, the System received rave reviews for stabilizing the banking system after the failures of March 2023. 

The Congressional Budget Office, for example, highlighted that the Federal Home Loan Banks played a crucial role in managing system liquidity during the crisis. When Silicon Valley Bank and others collapsed, it triggered concerns about a broader liquidity crisis in the banking sector. The FHLBs responded by significantly increasing their lending to member institutions. This is our mission; this is what we do best. 

In conclusion, I want to extend my sincere thanks to the Montana Independent Bankers for your proactive work in defending our cooperative. My final enduring truth is that I believe with your support we can maintain the strength of the FHLB as a reliable lender for your liquidity needs.