Which institution provides cash advances to members, including community banks and credit unions?

The Federal Home Loan Bank (FHLB) system is the correct institution that provides cash advances to its members, which typically include community banks and credit unions. The FHLB is a government-sponsored enterprise that was established to support mortgage lending and related community investment. By providing liquidity through cash advances, the FHLB enables its member institutions to meet their funding needs, which in turn supports lending activities in their communities.

In contrast, the other institutions mentioned, such as FHLMC (Freddie Mac) and FNMA (Fannie Mae), operate primarily in the secondary mortgage market. They focus on purchasing and securitizing mortgage loans from lenders to create mortgage-backed securities. While these entities play a crucial role in providing stability and liquidity in the housing finance system, they do not provide cash advances to community banks and credit unions. Traditional banks also do not specifically provide cash advances to other banks or credit unions; they primarily engage in deposit-taking and lending directly to consumers and businesses.