Hi Con - Thank you for doing this Reddit AMA! I'm not too familiar with the the Federal Home Loan Banks (FHLBs) and how they operate. Could you please elaborate on this?

Do you go by Cornelius or do you use a nickname?

In your opinion, could the government ever in the future step in and limit the mass purchase of residential homes? Also, do you feel like we will see a sharp decline in home prices in the next year or two? I have a young family and am hoping to see some better opportunities than what is available.

He’s a banker. He goes by Cornelius

What question do you think new home owners should ask more often and what question do you think people should ask less?

I go by "Con" but "Mush4brains" works too...

Not an economist but I'd be surprised if the current trend of declining home prices does not continue for several quarters especially with the Fed continuing to raise rates.

As for limiting bulk purchases, I do not see this in the future. Too disruptive to market forces.

Thanks! Just curious. I have a longer name myself and can never get anyone to use the whole thing.

Thank you for taking the time.

Question to ask more: How many years am I going to own the home.

Question to ask less: None...ask as many questions as you can.

Hi What is you favorite way to start your day?

Having read “Evicted” this year by Matthew Desmond, I’m curious to know how you feel about housing vouchers and their application? Or do you think a different strategy would be more suitable?

Feet on the ground is a good start...

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Any advice for law students in their first year?

Hi Cornelius, quick question about the eligibility criteria. Does FHLB assess the underlying mortgages that members are funding? I believe a similar program in Canada exists (NHA MBS/CMB program) however there are very stringent requirements on what can and cannot be funded.

How relevant are the FHLBs today? Should the FHLBs be required to do more to support affordable housing?

Limited experience with vouchers. The application process is cumbersome and works against the applicant and is a turn-off for many landlords.

They are largely irrelevant today and yes, yes, yes on more affordable housing!

FHLBs do not underwrite mortgages. They take them as collateral.

How long were you an independent director of the Federal Home Loan Bank of Boston?

AHP is set by statute at 10% of net income. It should increase in '23 but still be a small fraction of the FHLBs' taxpayer subsidy.

Thanks for the reply, Cornelius!

Thanks! Sounds like another area that could use reform, then. Given your position, I’d implore you to read Desmond’s book if you haven’t.

Over 14 years.

Transfer to medical school...

You so crazy Con Dawg, this is classic Con Dawg.

Thanks! Isn’t there a concern that the collateral being held is low-quality though i.e a similar situation to the ‘07-08 crisis? Another question - how can an institution qualify to become a FHLB member? Can anyone apply or are there some sort of capital requirement?

$1 trillion in assets

11 banks

Subsidized by the taxpayers.

FHLBs compete with depositors for funds.

Please DM me for more background.

What can I do as an entrepreneur to possibly start a lending company that takes advantage of these funds for homeowners or build different types of housing?

Thank you! At what point in your service did you realize the FHLBs were largely irrelevant?

If someone wants to learn more about the FHLB System, do you have any recommendations for good articles that help explain the system, and any issues it may have?

Today you'd have to form a bank. But Congress can and should change that admission requirement.

Go to Consumer Federation in America and search for a paper by George Gaberlavage. Look for my coming op-ed in the Boston Globe.

DM me for more...hope this gets you started.

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I advocated fro change from the beginning. Their irrelevance became apparent to me when members ceased taking advances and their AHP numbers plummeted. Along the way I asked, "How is the FHLB of Boston promoting housing?" The answer from management was unsatisfactory.

Thank you!

Fan of the landlord class?

FHLBs need not worry about quality because they pre-empt the FDIC. That's a real problem!

To apply for membership you must be a bank, credit union, insurance co. or CDFI. Helpful?

I work in tech Financial Services, and focus specifically on the compliance of eSigning of financial assets.

The FHLBs are a thorn in our side, because while they do generally understand the compliance of accepting eNotes of conforming residential mortgages that are registered on the MERS eRegistry, they seem to have no idea that there are similar security concerns of accepting other collateral types that have been eSigned.

For our perspective, as a technology company that has expertise in eVaulting of all different asset types including Equipment Finance, Commercial Real-Estate, and Ag loans... The FHLBs today are exposed to huge risk of not being able to perfect on the collateral pledged to them that has been eSigned without a complaint vault to hold the Authoritative Copy of the loan/lease as defined by UCC Article 9-105.

How would you recommend we approach the FHLBs to educate them on the risk of fraud, specifically double pledging and other nefarious activities, so that they can promote better lending practices as all types of lenders shift away from wet-signed assets and adopt eSignature without understanding the complexities of doing so compliantly?

Are there any redeeming qualities of the FHLB system that can be built on or do we need to start over?

Hi Con,

I'm a financial services attorney - not in the real estate space specifically, but a lot of my practice overlaps with that and other markets.

A hot button topic today (though perhaps it has always been so) is affordable housing, and how we encourage development of and access to it as a critical resource.

My question for you is this: Do you think that entities like the FHLBs can actually help the affordable housing problem? And if so, how?

I have always been skeptical of traditional mortgage-related "help" offered to consumers, as it appears to me that, while they might help the individual borrower in the short term, these programs ultimately inflate the market such that everyone is stuck with higher prices in the long run.

People tend to calculate the house they can afford by reverse engineering it - they take what they can afford in a monthly payment, and then work it backwards to arrive at a total house value. Thus why interest rates effect the value of housing, as you well know.

So, my concern is that mortgage programs which make it easier for people to bid higher on property just inevitably get baked into the value of all property, and within a short period of time everybody is back to square one as prices have adjusted to include whatever subsidy you've introduced in the system.

Do you see any way around this fundamental problem? In your view, is there a place for mortgage programs and/subsidies in the quest for affordable housing?

Great question.

FHLBs are a great business model that happens to have gone off the rails.

Redeeming qualities are its structure (not to be confused with current governance), access to funding. Its regulator has asked that its mission be reconsidered. So many parts of the economy could benefit from this funding source. Think housing SUPPLY, climate remediation, infrastructure, and more.

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FHLBs have been way late to the e-signature party. They lack any semblance of an entrepreneurial spirit. It will take a stong directive from their regulator, the FHFA, to drag them into the modern era.

Is this a Q&A or a solicitation of services?

In your article is stated that the FHLB CEO's are paid for "distributing a government benefit to their members." Are they aware of this mission? Do all the banks have the same mission? Who evaluates the success of this mission? Are their bonuses paid on profits or mission?

Thanks for this excellent question about affordable housing.

Here's the issue. Congress has mandated 10% of net income for affordable housing. FHLBs treat that at a ceiling rather than a floor. In this public/private partnership why not require 50% of net income for affordable housing? Part of the problem too is the conflict of interest between the member banks that benefit from robust dividends. Also, every dollar of CEO and C-suite compensation undercuts their contribution to affordable housing. All the incentives need to be realigned. Thanks again.

How do you see it possible for a regular working class family to afford a home? Housing prices are insane and they want perfect credit regardless of income. Rent prices reduce all savings and make it almost impossible to save for a down payment. It's getting to seem like a pipe dream that will never happen

The 11 FHLB CEOs take home from $2-3 million a year. These are essentially government positions. For example, the CEOs of the 12 Federal Reserve Banks earn less than $500K. Regarding "mission" part of the problem is that advances to members is considered part of their mission. However, the proceeds of the advances can be used for ANYTHING whether or not it is mission related.

I read you need to buy stock into the organization. How much is stock shares?

Totally get it! It was tough enough before the spike in mortgage rates. Increasing the FHLBs affordable housing quota to 50% would help but it would still be a drop in the bucket. Here's a suggestion for 45 million people who are struggling with the overhang of student debt...allow them to discharge that debt in bankruptcy. student debt is the only debt that is not dischargeable this way. This is before Congress now. Tell Sen. Durbin and Schumer to get off their a...s.

Very interesting, this has been insightful. Thank you!

FHLBs are SEC registrants but their shares do not trade.

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What do you think our the biggest opportunities for real estate investors right now and in the next year with a higher interest rate environment?

Already in the works. A bill was introduced this week in Congress.

How do your friends call you? Are you "Corney" to them?

As a non real estate investor, I have to think that whoever figures out the transition from retail and office space to whatever comes next will be the winner. Great question but several notches above my pay-grade.

I also go by "Connie". "Corney" drives me nutz...

Were you ever bullied for being named Cornelius?

My first home was purchased with -0- down payment courtesy the VA and the GI Bill.

How about a similar benefit for a year of national service?

Going by the nickname "Connie" led to some comments about the song, "A Boy Named Sue". Commotion ensued...

How does getting a home loan from the FHLB differ from getting one from a bank?

He doesn't say the disruption would be a bad thing, just that it isn't likely to happen

Standard term in AmeriCorps is 10 months. I loved my time and think everyone should get to do it, but I had to work a second job to pay rent and had zero savings.

This idea could work if we also subsidized housing for the folks doing the service.

Only members of FHLBs can borrow from FHLBs. In this sense, it's a very exclusive "club". Borrowing rates from the FHLBs are subsidized by you and me as taxpayers.

The question is, "What benefit do we as taxpayers get in return for our subsidization of the FHLBs?" Currently the answer to that question is, "Nothing".

This is EXACTLY the kind of solution we need, I hope you can spend some of your retirement as an activist :)

In other words -- the increase in housing prices is driven by speculation and housing as an investment vehicle rather than by immediate demand by people who actually want to live in houses.

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Is it hard having all that responsibility despite being 14 years old? What do you want to be when you grow up?

Isn’t the mass buying of homes the real disruptive force to the market? We aren’t talking about widgets here

I only know about FHLBanks from the monthly bond offerings I see from my broker. Is this part of the issue? It seems like a lot of big names in financial services industry are dealers for FHLB debt securities.

I would assume many of them would oppose any changes that make the debt offerings less attractive to people looking to buy fixed income products.

I just want to buy a house.

Why do I have to compete with corporations?

To be perfectly honest, I have no idea what role FHLBs or FHFA play in supplying housing. Like zero.

Can you give a brief summary of the pipeline of financing and responsibilities for these agencies are? Are they actual government entities, or are they similar to the Federal Reserve which is both public and private?

Save for individuals familiar with their roles already, I feel like most people don't even know these entities exist. I didn't, and I work in a field where I help design and build affordable housing projects...

I’m going to jump in here

the FHFA and other housing specific agencies can’t do much to address affordable housing, baring them instituting some form of subsidized program that permanently buys down mortgage interest rates. And there isn’t much of an appetite for that

Where the fed is screwing up, and what needs to be done

Right now inflation is being tackled by trying to dramatically curb demand by raising rates, which simultaneously increases housing costs and affordability.

The problem is, there is a massive housing shortage, so this process only really pushes out the individuals who are already on the fringes. In other words, it’s making it worse

What needs to be done, are federal and state level policies that stimulate supply

These should include tax incentives (both positive and negative incentives) for individuals and companies to sell Non Owner Occupied homes

Tax incentives to home owners to sell to Owner Occupants vs Investors

Tax incentives to stimulate new construction

Streamline permitting for new construction

Source : 30 years in the mortgage industry

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What loans arw available for people looking to buy a second home? Any programs we should be aware of?

Hello. You honestly come across as someone with a personal grievance rather than a change maker interested in positive changes. You seem hung up on the CEO salary, and i’m wondering why this wasn’t something you addressed during your many years as a board member?

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Absolutely it is. But your speech isn’t as important as other “people’s” speech ($$$).

Did you change your name to that after becoming an academic? or have you always had that academic name?

To add to that, while incentivizing supply increases we should also look to protect the developers from another future crash. Last time around tens of thousands of small to medium sized builders were financially ruined and left the industry entirely because they were left holding the bag on entirely too much inventory. That’s a big part of why the houses we need today don’t exist and likely won’t be built for another 5-10 years. I’m not saying a “too big to fail” type bailout, but a federal housing insurance program that builders can buy into and have a rescue net to sell inventory into. This could help create a diverse section 8 housing pool while keeping builders afloat.

Your comments are accurate, but new construction numbers are well below where they were in 2008, and overall percentage of home ownership is waaaay below 08

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What’s it like getting a handout from the government every time you fuck up, princess?

Commenting because interested in the response

I think the most elegant way to achieve this is to simply shift the current property tax to fall on land value, rather than land value + building value. That way, people's tax bills don't go up when they improve their house or build on their land. Most people who actually live on that land would see an overall decrease in tax bills because most of their property value (the building) no longer gets taxed, but empty lots and lots with condemned or run-down buildings see their bill go up significantly, forcing them to sell to someone who's actually going to do something with the property.

Combine this with zoning and permitting reform to lower construction costs, and I think that will help the situation a lot.

Why do rich people hate poor people so much?

How much bailout money did your company accept and how much did it pay back?

I don’t get it. Is this a citizens United reference ?

How a foreign investor with an ITIN not SSN can get a loan to buy a house in the USA?

https://www.brennancenter.org/our-work/analysis-opinion/history-corporate-personhood

> My first home was purchased with -0- down payment courtesy the VA and the GI Bill. > > How about a similar benefit for a year of national service?

You didn't have credit ratings back then.

I have been renovating historic structures to help with housing needs.

How can fhlb’s help me as a historic developer who goes into rural communities?

The whole American economy is based on speculative housing and the government backstop to keep it always trending up. It's what all of the 2007 recession was about.

Also the mass increase in populational demand. Both.

No, it's been overstated.

The two largest companies, Invitation and Starwood merged to form the largest institutional owner of single family homes, and they have a total of 80,000 units nationwide (out of many millions total of course).

wanting to invest a decent portion of my savings (500k or so) into real estate if some type. any recommendations? house, duplex, real estate? and how to go about it

How often does shady stuff happen in your department?

Hold on, this guy worked in the FHLB system for 14 years and then immediately turned around and bashed it after no longer being able to make a buck from it? Ha. Then he tries to leverage his knowledge of the FHLBs by trying to pretend to fix some imaginary problem and stay relevant. And teaches at BU, one of the most overpriced mediocre schools in the Northeast. Please, tell me more… Zero credibility.

Couldn’t agree more. I don’t know much about it, but I read his piece and his background and there is zero credibility there. He can’t profit from it anymore as he’s no longer on a board.

You keep mentioning the subsidy paid by taxpayers.

According to the FHLB site, they've never incurred a net loss.

Their benefit is using the federal promise to pay, thus getting lesser lower rates.

But how are the taxpayers losing $6+billion per year on this? Can you elaborate on this?

Thanks, thought so

What are the dumbest regulations you face regularly?

So we should go bankrupt then buy a house ? I don't understand.

Have you ever had a problem with people calling you Corn Hurl aka Cornhole?

Isn't 14 a bit too ypung to be a director?

Lets say you have a game where someone draws a random ball out of a bag of 100 balls. If it is white, you get $1. If it is the single Black ball in the bag, you have to pay that person $200. You wouldn’t want to play this game as it doesn’t benefit you much, and over the long run you actually lose money.

Well, someone comes along and says “Hey! I noticed you don’t want to play this game. What if every time someone draws the black ball, I pay it for you for free! So all you do is collect $1 every time its drawn with no risk to you?”

Of course, you love free money so you say yes.

20 new people draw a ball and they’re all white, so the nice person offering to pay if you lose hasn’t actually paid anything yet.

Does that mean the nice person hasn’t given you anything of value?

The nice person assumed the ~10% risk that one of the people would draw a black ball, and at $200 a ball that means they subsidized you $20 roughly.

This is in essence what’s happening here. Taxpayers are bearing the credit risk of these loans without the benefits.

The more detailed answer is that by being able to borrow money with the full backing of the taxable income of the United States, these loans have become seen as essentially “risk-free” and thus the borrowers do not have to pay credit risk. In the same way that someone who has great credit pays a lower rate than someone who’s just defaulted from a couple loans, having a government sponsored wrapper around your loan essentially makes your rate comparable to that which the US government itself borrows at. This is quite unfair, because hey, I would also like to borrow at SOFR MINUS a spread. Why can’t you offer me a 30Y loan at the Current 30y Treasury rate of 3.56%? Why do I have to pay 7%?

To me what's baffling how few questions people have (and on the same term how little the CS from banks know). I have a whole bunch of mortgages and I read each and everyone of them. For many people these are defining moments in their life yet few seem to even take notice of what they are about to sign. I have always questions, banks often don't mind tailoring small adjustments accordingly. These agreements strangely enough also don't seem to be standardized, I get sometimes from the same bank a couple mortgages in a single year and the agreements vary occasionally. On top as said, the banks customer service seldom seem to be well versed in what's going on.

There are too many incentives for investment managers to buy up housing and close to zero regulations against them.

These managers amassing mass blocks of housing collect all sorts of management fees to help investors who want the attractive yields of real estate ownership without dealing in the day to day aspects of being a landlord. By centralizing all of the operational aspects of being a landlord, they’ve created an investable asset class with high returns and a huge underlying industry able to support a ton of investment.

Now, everyone from pensions to insurance to individual investors get to have the upside of owning houses without the pesky downsides of chasing tenants for rent or evicting them.

How much inventory is blackrock and airbnb really taking out of the market?

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Do FHLB’s affect my ability to use my VA Home Lon?

Fair. But they allege they've never suffered a loss. So if that $200 never happens, then what?

Over enough observations, the odds of it never hitting becomes exponentially less likely.

At 300 ball pulls, the odds that not a single black ball is pulled is less than 5% At 500 ball pulls, the odds are less than 0.7% At 1000 ball pulls, the odds are 0.004%

And at every single one of those pulls, the nice person subsidized you with what is known as expected value. It might not have hit, but the fact that they were willing to take the hit if it did has se value to it.

You might not get in a car crash every day, might not even get in one in a decade. But having coverage to cover the damages from accidents had value in terms of car insurance

Yea, but don't tell this to /r/realestate or anyone who got in on the over bidding....they only think their house value will increase forever. It's like everyone has memory loss and doesn't think 2008 ever happened.

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Uhh it's really not, black rock alone owns around 60k homes. Those are just the big players. There are a ton of smaller shops out there owning a few k. It all adds up really quick.

https://www.cbo.gov/publication/57975

What? Population of modernized societies usually decreases, we're on a downward slope now.

Most people don't have the patience to learn about this stuff or read the fine print. We've become so accustomed to blindly clicking to accept the T&C that we don't even think twice when signing a mortgage. Look at credit cards, loads of people don't learn how to use them or read the fine print, then are shocked when their apr is stupid high after missing a payment. So many people are in such a rush that they won't take the time to focus on a major decision like buying a house.

Do you guys purchase assets like domains? I have some good ones for banks... HomeBankRates.com, Mortgage.Tools and Get.Loans ... Hoping to find a good bank that will use them.

60k is nothing on the scale of the country.

> Institutional owners still comprise a relatively small portion of the overall market, about 350,000 units, or 1.5% of the existing 23 million single-family home rental units, according to the National Rental Home Council. But in certain target markets, the concentrations are much higher.

In areas where they matter that's a ton of homes. This also doesn't include owners that own 10-20 homes either. One of the issues we have is so many of the single family homes are owned by someone else and being rented out.

yes most single family rental homes are owned by "mom and pop" landlords, and that's generally not seen as a problem.

if you want actual stats:

> According to data from the 2018 Rental Housing Finance Survey, for example, individual investors owned approximately 73 percent of single-unit rentals in 2018, compared to 23 percent of apartment homes in smaller properties (5 to 49 units) and just 7 percent of apartment homes in properties with 50 or more units. In that same vein, a recent Altus Group study estimated that institutional investors (firms with portfolios of over 2,000 properties), despite controlling over half (50 to 55 percent) of all U.S. apartment units, owned between just 2.1 percent and 2.5 percent of all single-family rentals.

Property taxes are too localized and State ran. This needs to be a federal solution.

People may not look at it as an issue, but the amount of 2nd homes people bought during this boom was a huge number. It's definitely an issue, just everyone wants to just point fingers at the big companies, but it's the market over all.

I have had a zero down VA home loan. Lots of service members and veterans have. I was in the 2nd Iraq war.

To be fair, most people buy a house a couple of times in their lives. This guy "getting a couple of mortgages a year from the same bank" is absolutely not the norm.

When you're buying your first house, you don't even know what questions to ask. Nobody is really there to help you through it, they're just there to get another day of their jobs done just like the rest of us.

I also came to rhis conclusion. More advice plz

Bro

You prefer mayo or ketchup?

Most people are just happy they can get the loan these days...like a mobile contract they cbf looking into all.

I'm still trying to understand how I can pay $2k a month in rent for 7 years straight without any missed payments, but I "can't afford" a $1400 mortgage.

You can get approved for the loan with subpar credit ratings?

Usually. Although we likely let slip in about 4 million in just the last 2 years, slo g with over a million or so legally. This grows the population and thus housing demand.

You don't even know what questions to ask is an excuse. Try reading the documents and ask everything you do not understand. Call up your loan officer and ask questions on their documents. If your loan officer minds find a better one. Mine didn't know the answer to one question. So he said he'd ask someone more involved with that part and I had an answer in a day. In the title office you can sit and read every page and ask questions. Would they grump, sure. Did I give a shit? Nope. Idgaf that it was the hottest market in the country and they had many deals. They didn't send me the documents early so both my husband and I sat there reading and asking. When the person had to step away, we asked for post it's and put the questions there.

It's never going to be someone else's jobs to make sure you know wtf is happening. Even in a doctor's office, the onus is on you to ask questions.

F*ck market forces when people are dying in the streets, at a certain point the governments job is to step in and not let people die, but if people like you cared about people and not money we wouldn't be in this situation.

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>When you're buying your first house, you don't even know what questions to ask. Nobody is really there to help you through it, they're just there to get another day of their jobs done just like the rest of us.

I took one of my parents with me at every stage of house buying. They've done it 4 times at that point. After 35 years of home maintenance they know that to look out for. My mother asked questions I wasn't even considering. But they were good questions.

I went to the mortgage advisor alone. But discussed the results with my parents.

I think most people will have parents, uncles/aunts or good colleagues that would be willing to go through the above with you.

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Why would you say that🥲

What are some of your fav and least fav lease terms.

When I signed my mortgage, I sat there for an hour at closing in front of the real estate agent and the seller. I didn't have a copy of the documents I was about to sign ahead of time. It was 50 to a hundred pages (at least a half inch thick). It's more dense than most college level reading. So it's not surprising that most people don't read it and don't understand them.

It's a good idea, but a big ask. Many families aren't that tight, and it's not the kids fault.

But it's not about how many mortgages you end up getting, it's about not reading. Yes the other reply was out of the norm, most people will have maybe 3 mortgages in the ir life, but that doesn't mean you don't do the research on it and read the document.

Do we actually need 11 FHLBs? Advances are down and honestly SF and Chicago could handle the entire system

You cannot

> You cannot

Thank you, that's what I thought.

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Lol what services would a professor be soliciting for

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Realestate keeps up with basically inflation. Calling 2008 a blip? What? It had houses that sold for 270k in 07 listed for 90k in 2010. That's not a blip, thats a correction.

> VA and FHA loans don’t have strict credit rating requirements,

The loans don't but you can't get the loan from a bank with bad credit.

2008 was a gully: https://www.youtube.com/watch?v=PgGLgygsqus

It's a racket, that's why.

You need to understand that you're extremely lucky. I do not have friends, family, or parents well versed and I had to learn everything myself. Now I am the one that friends, family and parents come to for advice.

My parents are college educated with decent middle class careers. They are absolutely clueless.

I'm a massive proponent of an entire year of high school being dedicated to life skills. People always say that's the parent's job but if that's what they've been saying for the last hundred years how many hundreds of millions of adults have come out clueless, because their parents were clueless?

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To further add to your point, the home buying system has now become automated. These companies that are buying up houses have found a model that cuts down on their costs and increases their bottom line. Technology has made it feasible to out bid the average home buyer.

https://www.vice.com/amp/en/article/dy7eaw/robot-landlords-are-buying-up-houses

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Agreed, I grew up on section 8 housing. That system is very cumbersome, pretty intrusive and my mother didn’t have the easiest time finding housing. In many ways it’s helpful but in other ways it keeps you poor because the moment you cross a certain income amount you risk losing all assistance.

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Whatever he wants to talk about in PM's rather than answering in his replies during a public Q&A.

The answer to that will be highly dependent on the individual and the lender they're dealing with. Without knowing any specifics about your situation, the only advice I can give you is to explore financing options through a few different lenders. While there are general guidelines that all the lenders will follow, some can be more flexible than others. Now, if you already have shopped around and you've been told no by multiple companies then there's a good chance that there are one or more factors that you need to address.

I would recommend looking at /r/personalfinance - as always, I would take any advice from Reddit with a grain of salt but that sub generally has good advice that can at least put you on the right track. Make a burner account if you don't want your financial details linked to your main account.

I've been in a similar position before so I know how hard it can be. Best of luck to you.

What the heck are you on about? It was just a dumb jokey comment. You ruined it. Booooo

They asked a low effort question (they phrased it nicely) that a simple Google search could start them on their journey.

Right, but the reason for NC numbers being so low is that so many builders are out of the industry, and those that remain are hesitant to break new starts. That trend has existed for over a decade.

Their claim that they never suffered a loss is a ruse. They lend to banks. If the bank fails the FHLB gets to collect AHEAD if the FDIC, in effect sticking the taxpayer with the loss.

The value of the government guarantee of the FHLBs' debt is at least 50 basis points. 50bps X $1 trillion = $5 billion/year. According to the Congressional Budget Office, the value of the FHLBs' tax exemption is $1.3 billion/year. $5 billion + $1.3 billion = $6.3 billion. Helpful?.