Newly published comment letters show that housing and community advocacy groups support FHFA’s plan to use member incentive programs to encourage more mission-oriented lending by the FHLBanks.
Because deposits at the Federal Reserve don’t earn interest, FHLBanks’ use of IBDAs at large banks with high credit has expanded over the last few years. FHFA wants to give those deposits a capital treatment equivalent to that given to overnight Fed funds sales.
Although a Republican victory in November might revive efforts to release the GSEs from conservatorship, this would likely be a multi-year effort, according to the former FHFA director.
A nonprofit has called on the Federal Home Loan Banks to launch a program for mortgages with terms of 40 years, arguing the products will help to address affordability issues.
The FHLBanks last year agreed to voluntarily raise their contributions to affordable housing programs from 10% of net income to 15%, but they balked at Treasury’s suggestion to increase that to 20%.
All but one of the regional banks experienced a sequential decline in net income, but most reported an increase in voluntary contributions to mission-related activities. (Includes data table.)
Although outstanding advances increased slightly in the second quarter, most large banks and thrifts cut FHLBank borrowing from first-quarter levels. (Includes two data tables.)
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