Federal housing finance bureaucracy

I’m always stunned when I learn that (after all these years) the government has a huge bureaucracy I never heard of. How does $1 trillion slip under the radar?


**Review of Federal Home-Loan Banks Is Planned**
**FHFA to examine role and structure of nearly $1 trillion network of government-chartered cooperatives**
**By Andrew Ackerman, The Wall Street Journal, Updated Aug. 31, 2022**

**The U.S. government is eyeing a potential revamp for the Federal Home Loan Banks, a nearly $1 trillion network of government-chartered cooperatives that provide cheap funding to thousands of banks....**

**The FHFA has yet to outline an overriding goal for its review, but it could lead to a push to expand the membership of the system to nonbank mortgage companies and real-estate investment trusts, potentially making the system more housing-focused after decades of what critics characterize as drift. It also opens up the possibility of the system serving purposes in addition to housing....**

**Nonbank mortgage companies and real-estate investment trusts have come to play big roles in housing finance but generally aren’t among the 6,500 members of the home-loan bank system. Including them could help those firms fill the void left by big commercial banks, which have cut back on mortgage lending to all but the most creditworthy customers....**

**While Fannie and Freddie buy mortgage loans and package them into securities, the Federal Home Loan Banks play a different role in housing finance: channeling money from global bond markets to thousands of institutions across the U.S.**

**As of July 31, the system’s borrowings came to about $937 billion, making it one of the world’s biggest debtors and the second-largest in the U.S. behind the Treasury Department. The money flows through 11 regional cooperatives, which feed it to their 6,500 member institutions — commercial lenders, thrifts, credit unions and insurers. Implicit government backing means they can borrow cheaply and pass some of the savings on to members....** [end quote]

I actually bought a AAA-rated Federal Home Loan Bank bond on the secondary market via Fidelity last week, listed as a GSE bond. I didn’t realize it was a separate system from Freddie Mac and Ginnie Mae.

This is worth keeping an eye on. If the system is expanded to lend to non-bank mortgage companies with subprime lenders, it could open taxpayers to liability during another financial crisis. Also, if the system is expanded to lend to REITs, their stock prices could benefit.




Interesting reading. The scope of it is amazing.

The SBA loans…Keybank, I am a member, is in the top five using SBA loans. The bank might be among the safest in a global financial meltdown. The loans probably are government guaranteed. The bank probably has zero to do with swaps or foreign debt. Probably zero to do with securitized mortgage debt at least outside of the SBA loans.

As money comes in for my NFT I am eying my credit union or Keybank for safe keeping.