FHLB LOCs are for large investments in excess of the FDIC/NCUA insurance limits of $250,000. My Team and I work with a large audience of Banks and Credit Unions who are members of the Federal Home Loan Bank and can secure your deposits that are in excess of FDIC/NCUA insurance levels by way of an irrevocable Letter Of Credit which provides you with the peace of mind that if the issuing bank/credit union should fail, you would be paid in full for your investment dollars by the FHLB.
No tracking and monitoring of collateral is necessary by you the depositor/investor and you enjoy placing your large investment dollars into one CD or Money Market Transaction without having to open up a number of accounts at various financial institutions to accommodate your entire investment, all the while earning one attractive rate on all of your money without having to blend rates from a number of participating banks or credit unions. This greatly reduces your accounting and operations since you only have to make one book entry and disburse one wire transfer. FHLB LOCs are among the safest form of collateralization and are widely permitted in most state statutes for the securitizations of public funds.