Wells’ borrowing boost sparks concentration fears for Home Loan banks
By Brian Collins
Wells Fargo Bank has dramatically increased its borrowings from the Federal Home Loan Bank of Des Moines, more than doubling the San Francisco institution’s level of advances and accounting for the majority share of borrowings at the government-sponsored enterprise…. “It is a problem when a FHLB is dependent on one member institution,” said Basil Petrou, co-managing director of Federal Financial Analytics. “What happens if Wells Fargo decides to move its business to another FHLB?” Other Home Loan banks with large concentrations of advances with one member have ended up burned in the past. The Seattle Home Loan bank merged with the Des Moines institution in part because its largest member, Washington Mutual, failed in 2008. “Seattle was dependent on Wamu and now Des Moines is dependent on Wells Fargo,” Petrou said. “And you never think anything bad is going to happen until it does.”