WASHINGTON, Nov 7 (Reuters) – The U.S. regulator charged with overseeing the Federal Home Loan Banks said in a report on Tuesday the system is overdue for an overhaul in its mission and structure.

The Federal Housing Finance Agency emphasized in the report that there needs to be a clearer distinction between the purpose of the FHL banks and the Federal Reserve, which is the primary emergency lender for banks. The agency said FHL banks were created by Congress in 1932 to provide liquidity to banks for affordable housing and other economic development.

Tuesday’s report was the culmination of a year-long project by the agency to review the FHL banks. It indicated that the FHL banks had shifted from that original mission over the years, and the system had not been updated to meet current realities.

“For complex and varied reasons, there has been a decreased focus on housing-related activities by many institutions that are members of the FHLBank System,” the report stated. “These changes, taken together, highlight the need for (agency) to clarify the mission of the System so the FHLBanks are held accountable for serving their public purpose.”

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