FHLBanks Affordable Housing Program (AHP)

The FHLBanks have a program, the Affordable Housing Program (AHP), that distributes 10% of profits to … affordable housing projects.  A good initiative.  Since its inception in 1990 the AHP has distributed about $8 Billion.  The program is sometimes described as the Jewel in the FHLBanks Crown. Good stuff.

Of course, to distribute $8 billion, the Banks had to make 10 times that, $80 billion.  And the program is not voluntary, it is mandatory. 

I’m pleased that when I pay my taxes, almost 10% allocated to discretionary expenditures goes to affordable housing, as part of the HUD budget, and others I’m sure have pet appropriations they are pleased to pay taxes on.  But not the FHLBanks, they do not pay taxes.  And they only pay 10% of the income to the AHP, I think we all pay more than that in personal taxes.

With the recent increased scrutiny on the FHLBs – from the FHFA (the regulator of the FHLBs) with their review of the system at 100 – providing a look at things the banks could do better and the CBO report estimating the value the FHLBanks enjoy due to their affiliation with the US government, the FHLBanks have begun to increase their efforts towards affordable housing and have indicated a 5% voluntary distribution of profits towards.  That is a step in the right direction, but a small one.  As shown in the review of FHLBank financials (available on this blog page), profits are skyrocketing, and the banks seem unable to do much constructive with those profits.

 I have an idea.

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One Response

  1. Fannie Mae and Freddie Mac both pay federal corporate income taxes — at a rate of 21% now – 38% before the tax bill in 2019 that lowered taxes on corporations and the wealthy, shifting the burden to working families and to future generations to pay trillions in debt.

    FHLBs don’t pay taxes on state or local corporate taxes.

    They got themselves exempted from paying excess income for tax-exempt institutions too. The 2019 requires any tax-exempt organization which pays its executives above $1 million to pay 20% of the amount above $1 million in taxes. Despite paying their 11 presidents between $2-$4.3 million, none pay this excess income tax.

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