In our review of FSOC’s decision to de-designate Prudential, we note a seeming change in policy with regard to the Federal Home Loan Banks:  if a huge financial institution, including an insurer, is a big borrower, FSOC no longer fears contagion risk from the SIFI back to the Banks and thus on to the taxpayer.  Indeed, FSOC was comforted about Pru’s systemic risk in part because the insurer is a Home Loan Bank member.

The full report is available to subscription clients. To find out how you can sign up for the service, click here.