Business Case Studies & Business Publications

Fragility in the FHLB System?

Hachem, Kinda;Evan...

Case

Fragility in the FHLB System?

Hachem, Kinda; Evans, Lucy

GEM-0266 | Published June 24, 2026 | 12 Pages Case

Collection: Darden School of Business

Product Details

Nuvo Bank is finalizing its application for a national charter, and Claire Lowry, the proposed corporate treasurer, is responsible for developing the bank’s contingency funding plan. Nuvo’s founders expect to rely heavily on the Federal Home Loan Bank (FHLB) system for emergency liquidity, but it is up to Lowry to decide whether this is the best path forward given emergent risks in the system. At the University of Virginia Darden School of Business, this public-sourced case is used in an MBA elective on money and banking to analyze how changes in bank liquidity regulation and money market fund reform reshaped the scale and function of the FHLB system; apply the concepts of maturity transformation and regulatory spillover to diagnose systemic risks outside the traditional banking perimeter; and develop managerial judgment around contingency funding plans in the corporate treasury department of a commercial bank.