Rob, I think the FHLBs will be impacted significantly by reforms to be implemented over the next several quarters. FHFA has created a political position that it cannot walk back. For smaller banks, this is a much greater liquidity risk than deposit runoff due to the recent instability.
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Mike Odom
Chief Executive Officer
Great Oaks Bank
Eastman, GA
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Original Message:
Sent: 04-03-2023 16:29
From: Rob Blackwell
Subject: Tuesday Topic: Reforming the FHLB System
Interest in reforming the Federal Home Loan Bank system has spiked since the FHLB of San Francisco lent $15 billion to SVB and $4.3 billion to Silvergate, and the FHLB of New York lent $11.3 billion to Signature, late last year. Of course, all three banks collapsed last month, but the FHLB system won't suffer any losses because of its super-lien status.
This reform debate began last August when the FHFA announced its first-ever comprehensive review of the system to ensure it's "positioned to meet the needs of today and tomorrow." Initially, many analysts and industry players were skeptical the review would result in meaningful changes. But that assessment began to shift when it became clear the Home Loan Banks were propping up shaky banks.
Last Friday, the American Bankers Association and 51 state and territorial banking associations wrote a letter to the FHFA, urging it not to mess with the system's structure. Do you think FHFA will listen? Or has the recent pressure all but guaranteed change? If reforms do happen, is there a way to ensure the system works better for community banks?
This reform debate began last August when the FHFA announced its first-ever comprehensive review of the system to ensure it's "positioned to meet the needs of today and tomorrow." Initially, many analysts and industry players were skeptical the review would result in meaningful changes. But that assessment began to shift when it became clear the Home Loan Banks were propping up shaky banks.
Last Friday, the American Bankers Association and 51 state and territorial banking associations wrote a letter to the FHFA, urging it not to mess with the system's structure. Do you think FHFA will listen? Or has the recent pressure all but guaranteed change? If reforms do happen, is there a way to ensure the system works better for community banks?
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Rob Blackwell
Chief Content Officer and Head of External Affairs
IntraFi
Arlington, VA
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0 Comments
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