Banks Leaned on a Little-Known Lender in March as Customers Fled

Banks are turning to an obscure government-linked lender to shore up their balance sheets following the industry’s rockiest period in years. 

The Federal Home Loan Bank system—established during the Great Depression to help promote mortgage lending and now a source of liquidity for banks of all stripes—issued a record $495 billion of debt in March to fund loans, which are called advances, the system’s Office of Finance said. Banks ramped up borrowing that month as customers pulled out deposits and investors panicked over failures that threw the stability of the U.S. financial system into question.