Banks’ Funding Questions Aren’t Going Away

Even banks need to go to the bank sometimes.

With the Federal Reserve both raising interest rates and seeking to reduce the size of its balance sheet, there has been a lot of focus on the possibility of higher funding costs for U.S. banks. But even if clients are demanding higher rates for their deposits, banks have a number of places to turn. One is the Federal Home Loan Bank system. This nearly $1 trillion network of government-chartered cooperatives offers so-called advances, or secured loans, to commercial banks and others.