July 26, 2024 — I’m hoping the early returns are not indicative of the final tally, and I’m sure they won’t be. However last week, the previously referenced response to the FHFA’s Request for Input (RFI) from the Council set a dismal tone and it was followed by responses from the American Bankers Association and the Independent Community Bankers Association – dismal and dismal.
Were the nation’s housing market working properly, perhaps a case for the status quo could be made, but against a backdrop of acute housing affordability challenges and significant pockets of underserved housing and community development disparities, such a position is dismaying.
Fortunately, there are other ideas out there. I’ve argued for over a year, using data, that the FHLBanks can provide more money to the problem. And now with the RFI responses due to be published soon by the FHFA, we’ll have the opportunity to see what ideas surface.
One such response is already available as submitted by Kathryn Judge, Professor of Law Columbia Law School and Aaron Klein, Senior Fellow at The Brookings Institution which argues amongst other things that refocusing the FHLBanks more heavily towards housing and community development and especially that activity provided by smaller community banks is an important mission adjustment. Here is their submission https://www.brookings.edu/articles/comments-on-the-federal-home-loan-bank-mission/
Other responses will add to this piece, providing still more weight to the need for change. That will start the debate the FHLBanks have thus far avoided.