Open Letter to Trump Administration Calls for Federal Home Loan Banks to Step Up or Be Eliminated

William Isaac, former FDIC Chairman, and Cornelius Hurley, former FHLB Director, urge Elon Musk to push for immediate change

New York (February 25, 2025) — In an open letter delivered today, Cornelius Hurley and William Isaac urged Elon Musk, along with the President, to take steps to reform or to eliminate the ineffectual $1.3 trillion Federal Home Loan Banks (FHLBanks).

The letter, addressed to Elon Musk in his capacity as special advisor to the President and leader of DOGE, recommends that President Trump issue an executive order calling for the FHLBanks to increase their commitment to affordable housing by five-fold – 50 per cent of net income – or face elimination.

The FHLBank system, formed to address a housing crisis has, instead, become a taxpayer-subsidized enterprise whose exclusive function is to enhance the profitability of member banks and insurance companies. Housing has been sacrificed along with the interests of taxpayers and consumers.

FHLBanks must understand that the days of open-ended government support for their operations have ended. If they do not cooperate in addressing the housing crisis, the federal government should not support any new debt issuances by the eleven FHLBanks.

“As the Administration and DOGE seek out government efficiencies by eliminating departments and agencies (Education, USAID, CFPB, etc.) no governmental enterprise presents a more compelling case for either its radical repurposing or for its elimination than do the FHLBanks,” the open letter states.

“The nation faces a housing crisis. The FHLBanks are ignoring that crisis,” said William Isaac, former Chairman of the FDIC and co-author of the open letter.

Cornelius Hurley, co-author and a former FHLBank director noted, “The FHLBanks receive an enormous taxpayer subsidy, pay no taxes, and abuse their federal charters. It is long past the time when the FHLBanks should be held accountable. Either they should help solve our housing crisis or they should be eliminated.”

An abbreviated version of the open letter was posted here, where concerned citizens and organizations are welcome to sign on to support the ideas presented.

The full letter, as sent to Musk, can be found here.