Sen. Warren: Return FHLBs to housing mission

Andrew Harrer/Bloomberg

WASHINGTON — Sen. Elizabeth Warren, D-Mass., pressed Federal Housing Finance Agency head Sandra Thompson to move forward on rulemakings that would focus the Federal Home Loan banks more squarely on affordable housing financing. 

While some lawmakers, notably Sen. Catherine Cortez-Masto, D-Nev., who has challenged officials during Senate Banking Committee hearings, have questioned the Federal Home Loan banks' housing goals and how well they're being met, Warren's letter represents an escalation in political pressure in favor of the reform that the FHFA is trying to force on the Federal Home Loan Bank System. 

Warren said in the letter that the Federal Home Loan banks have "failed to deliver on their housing and community development mission," and cited the advances the Home Loan banks gave to Silicon Valley Bank and Signature Bank before they failed last year. 

"While these subsidies were meant to address our nation's housing needs, they mostly supported bank executives and shareholders instead," Warren said in the letter. 

She urged Thompson to act on the FHFA's suggestions in a long-awaited review of the Federal Home Loan banks in November. 

Specifically, Warren said that the FHFA should change membership requirements for the banks, "ending the current absurd state of affairs where, in recent years, nearly half of Federal Home Loan bank members have not originated a single mortgage." 

She asked that the agency create rules that would require members to hold at least 10% of their assets in residential mortgages in order to receive Federal Home Loan bank financing. 

Warren also asked that the FHFA clarify the mission of the Federal Home Loan banks as providing stable liquidity to members and supporting housing and community development, "not simply to prop up failing banks."