Federal Home Loan banks should include nonbank lenders, advocates say
Federal Home Loan banks should include nonbank lenders, advocates say
Abstract
"There is more that the banks can and should do."The agency is looking at the banks' operations and mission to determine if it is meeting the goals set by Congress in 1932 when the system was created during the Depression to provide liquidity and spur homeownership. Over the three-and-a-half-hour session, many of the nearly three dozen speakers criticized the banks' Affordable Housing Program, or AHP. In 2021, the Home Loan banks provided $352 million to the program, which some experts said was a drop in the bucket compared to what is needed. The Federal Home Loan banks have come under harsh criticism in the past year by critics including former Federal Reserve Gov. Daniel Tarullo, who has called for more oversight of the 11 regional banks, claiming they have expanded beyond their mission of supporting housing and into activities that pose risks. Cornelius Hurley, an adjunct professor at Boston University School of Law and a former independent director of the Federal Home Loan Bank of Boston, first suggested in an opinion piece in American Banker, written with William M. Isaac, the former chairman of the Federal Deposit Insurance Corp., that the FHFA create an advisory committee of outside experts to explore ways to modernize the banks. Bob Broeksmit, president and CEO of the Mortgage Bankers Association, called for independent mortgage bankers to be allowed in as members since nonbanks have supplanted banks in the past decade and now originate the vast majority of home loans. Ron Haynie, senior vice president of housing finance policy at the Independent Community Bankers of America, urged the FHFA to "Do no harm" to the Home Loan banks by making changes. The commission would examine the cost of the banks' operations including of the implicit government guarantee of the banks' debt.