September 26, 2024. The intent of this blog has been and will continue to be inserting facts into the discussion of how FHLBanks can do more to address acute shortcomings of affordable housing and community development.
The Banks take a different approach. As noted, the FHLBank presidents opted to pick around the edges seeking out minor inconsistencies that prevent them from doing more. I think, all combined, the impact of their suggestions will be minimal.
The Chairs of the Boards of the 11 FHLBs took a higher-level approach, but too failed to incorporate facts. First off, their response speaks to all the good things they do and points to the commitment to voluntarily do even more. But then concludes even if they did more, it would not solve all the problems of the housing market – or even more obliquely won’t address the underlying complexities of the housing crisis. Of course it won’t, the incremental $350 million asked for is a drop in the ocean. But if it is good – as repeated repeatedly, more would help. The paragraph then parrots the points made by the presidents.
My favorite though is the next paragraph, the second to last, reeking of apple pie, but with no substance. First, a bit of a scare that possible proposed solutions would weaken the banks! Then, a bit more of a distraction that proposals might upend the capital structure of the FHLB system and jeopardize the stability and reliability of the FHLBanks!! Followed by a statement that capital at the banks is important for safe and sound operations – I can’t give that one an exclamation point. And then, a slip of the tongue – that capital insulates U.S. taxpayers from risk – except that throughout the debate, ongoing for years now, the FHLBanks have argued strenuously they are not supported by the government and therefore receive no benefit from being a GSE!!!
Enough – for now. Just one fact and a question. In 2023 FHLBanks added $3.3 billion to retained earnings. Did risk grow? Did the potential cost to the U.S. taxpayers increase? If not, then why isn’t that money available to address the issue at hand – the affordable housing crisis? Three questions, that was.