The 12 Federal Home Loan Banks (FHLBs), which provide much needed advances to thousands of member institutions, including commercial banks, thrifts, credit unions and insurers, reported a preliminary combined $672 million operating loss for the fourth quarter of 2008, compared to a combined net income of $846 million for the fourth quarter of 2007. The combined 2008 losses, the first in nearly 20 years, resulted primarily from $1.773 billion in write-downs on certain "private label" residential mortgage backed securities and home equity loan investments, and net losses on derivatives and hedging activities.

In order to strengthen their positions and preserve capital, several FHLBs have either suspended or deferred decisions about quarterly dividends or temporarily suspended repurchases of their stock from members.