The great American ‘homewashing’ is happening under our noses

The Hill ^ | 11/25/22 | Cornelius Hurley,

[EBH]

The most prominent purveyor of homewashing is the massive government-sponsored enterprise known as the Federal Home Loan Banks. There are 11 regional FHLBs from Boston to San Francisco and points in between. They and their 6,500 member institutions follow a simple business model.

The FHLBs borrow at a deep discount due to their government status. They then pass part of the government subsidized discount on to their members in the form of low-cost advances. As of Sept. 30, the FHLBs had over $1 trillion in taxpayer-subsidized debt outstanding. Subsidized advances to members stood at $655 billion, an 86 percent increase over year-end levels.

It is all based on a myth.

The first part of the myth is that the subsidized advances to members are used for housing. This was the original purpose of the FHLBs when they were created by Congress in 1932.

In truth, the FHLBs’ subsidized advances can be and are used for anything the members wish to use the funds for. This was confirmed by the Government Accountability Office many years ago when it found: “Another challenge facing the system is that there is limited empirical information on the extent to which FHLBank advances and other services benefit housing and community finance.” Yet, the myth persists, presumably because the words “Home” and “Loan” are misleadingly embedded in the names of all 11 FHLBs.

The second part of the myth has to do with affordable housing and community development. By statute, the FHLBs are required to set aside a small portion of their earnings for this purpose. However, when one contrasts the taxpayers’ estimated $6.3 billion taxpayer subsidy of the FHLBs with their paltry contributions to affordable housing and community development, the payout looks like this:

[EBH]

What it says is that for every $20 of taxpayer support for the FHLBs, only $1 is set aside for affordable housing. The other $19 goes directly to the FHLBs and indirectly to the FHLBs’ members. It is worth noting here that each of the CEOs of the 11 FHLBs receives million-dollar pay packages. This is for distributing a government benefit to their members.

[ConservativeMind]

For our mortgage, it was cheaper to go with a private lender than the government.

I would not have been able to discharge the mortgage insurance, as I recall. With what we got, we had no mortgage insurance requirement.

[sauropod]

Bkmk

[Harmless Teddy Bear]

You take a blood out of your right arm, put in your left arm spilling 90% of it along the way.

:the old explanation of how government subsidies work:

You take a blood out of your right arm, put in your left arm spilling 95% of it along the way.

:the new explanation of how government subsidies work:

[Jan_Sobieski]

It’s good to be a member of the socialist party of the USSA