Josh,
This is a really good question. We actually cover the FHFA's report on the podcast out this morning with Professor Con Hurley. You can listen here: https://podcasts.apple.com/us/podcast/how-fhlb-reform-can-help-banks-housing/id1506774121?i=1000636768088.
But to get at the heart of your question, I don't think we know enough information yet about what the FHFA will do to say this is really a "threat" to banks' liquidity. Although the FHFA report was 115 pages, it didn't lay out in granular detail how it would implement some of its ideas. So, for example, we know that "some" FHLB members would be required to pass an ongoing mission test and the FHFA has suggested it be 10%. But exactly how that plays out is still unclear. Is that for all members? How often would the test be given? Every year? Or five years?
I'm not dissing the article, but when you're in journalism you put the most exciting headline you can on it in the hopes people will read. But we don't really know that the FHFA's plans will threaten bank liquidity. For all we know, FHFA could be aiming at MetLife, which is a huge borrower of FHLB advances, when it implements its proposals. I think it's a fair question to be raising and for the media to be raising, but we really need to wait and see more to see how this will shake out.
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Rob Blackwell
Chief Content Officer and Head of External Affairs
IntraFi
Arlington, VA
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Original Message:
Sent: 11-28-2023 09:15
From: Josh Kremer
Subject: Banks' liquidity sources threatened by plans to limit home loan borrowing
https://www.capitaliq.spglobal.com/web/client?auth=inherit#news/articleabstract?id=78543443<o:p></o:p>
What do you think about this article? FHFA plans to propose rules that would curtail US Banks' borrowings from the FHLB.
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Josh Kremer
Controller;Risk Officer
Osgood State Bank
Osgood, OH
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