FHLBs Face the Footlights

FHFA Director Thompson will shortly take questions about the future of the Federal Home Loan Banks after a series of recent revelations cast these GSEs out of the obscurity they have long enjoyed at considerable advantage.  Karen Petrou recently pointed to developments such as the System’s decision to serve as a wide-open window for downward-diving and arbitrage-seeking banks and she’ll talk more about it this Tuesday on a podcast with Rob Blackwell.  Among the questions Mr. Blackwell asked was whether FHFA intends seriously to tackle FHLB reform after three hearings last year.  As we noted at the time, these hearings were largely opportunities for FHLB fans to show their appreciation and FHFA to bide its time.  Director Thompson may well wish to do the same, but she likely didn’t accept the invitation to speak just to say nothing.