The bright spot in the FHLBanks’ earnings report was net interest income, which climbed to $1.25 billion 2Q20, a 36.4% sequential increase, despite the fact that advances declined by almost 31%. (Includes data chart.)

Although the FHLBanks market themselves as local lenders, this image doesn’t match their operations. Ten of the nation’s largest commercial banks account for about 30% of FHLBank advances.

The MBA argues that FHLB advances would offer REITs a cheap alternative to repo financing. One way to offset the added risk posed by REITs would be to increase the haircuts on their collateral requirements.

The final rule sets the goal for prospective mortgage purchases at 20% of each FHLBank’s Acquired Member Assets program.

Borrowings by members of the Federal Home Loan Bank System increased 25.8% in the first quarter driven by COVID-19-related volatility. On the other end, the FHLBanks reported a huge drop in combined earnings with the San Francisco FHLB incurring a first-quarter loss.

Most of the FHLBanks’ COVID-19 relief programs have been initiated at the district level, resulting in considerable variations in scale and generosity.

The Federal Home Loan Banks will accept Paycheck Protection Program loans as collateral. The loans carry a 100% SBA guarantee.

Banks and thrifts held $482.5 billion of advances from the Federal Home Loan Bank system in the fourth quarter of 2019, a 3.3% sequential drop. (Includes data chart.)

Borrowers are entitled to forbearance if unable to make their monthly mortgage payment due to the virus, the FHFA has reminded servicers.

Lawrence Parks, a former FHLB-SF executive, believes an FHLB plan to buy Freddie seems as plausible as other ideas that pass for GSE reform.