Affordable housing and community development advocates say taxpayers aren’t getting enough for the government subsidy of the FHLBanks. The FHLBanks say critics misunderstand their federal support.
The Council of Federal Home Loan Banks said Treasury’s proposal that the FHLBanks use their excess retained earnings to support affordable housing is asking them to operate on minimum capital levels.
Industry players had raised concerns that the original proposal would have been too broad and included misconduct that didn’t affect safety and soundness.
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.
The GSEs will expand eligibility for loan modifications by revising mark-to-market LTV ratio-based requirements and using a step-by-step process until the borrower’s P&I payment is reduced by 20%.
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
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