FHFA sounds alarm on Home Loan Bank funding, advances
By Brian Collins
Concerns about credit concentrations at the Federal Home Loan banks are opening the door to a wider conversation about — and likely rulemakings on — stricter regulation of these government-sponsored enterprises. …Watt’s new regulatory focus encompasses new standards for interest rate risk, capital, and liquidity, according to a Federal Financial Analytics report. That could have a big impact on the system overall. It could lead to a “hike in risk-based [capital] ratios and accompanying earnings stress,” the analysts warn in a May 23 report. “If FHFA now really wants to clip the wings of the FHLBs in this business, profit will suffer.”