Banks May Take Hit on FHLB Stock Holdings

Secondary Market/Investors

Serious cracks are showing in the nation’s Federal Home Loan Bank system, and it now appears as if member banks are being forced to take at least some of the hit for it. Various banking industry sources suggested Friday afternoon that some Home Loan banks are squeezing the liquidity faucet, and refusing to pay banks back for FHLB stock they purchased.

The move by five separate Home Loan banks comes as the market value of mortgage-backed securities held by the FHLBs has tanked, and is likely to further exacerbate liquidity problems for some banks, analysts told HousingWire ... more»