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

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.

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

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.

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?

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

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.

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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.

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?

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

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?

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?

Fan of the landlord class?

Thank you!

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.

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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.

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

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?

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

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?

$1 trillion in assets

11 banks

Subsidized by the taxpayers.

FHLBs compete with depositors for funds.

Please DM me for more background.

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?

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