Law for Sustainability
Opening screen of FHFA Listening Session, October 3, 2022. 164 views as of October 13.
The eleven Federal Home Loan Banks - established by Congress in 1932 – “have total assets that exceed $1 trillion. They were conceived to support housing finance, but they no longer play that role.” So wrote Cornelius Hurley of the Boston University School of Law[1] in “Imagining Taxpayer Response to FHFA Reform” in American Banker , October 7, 2022. Why should environmental citizens care? The home is our immediate environment, our housing has huge environmental impacts that can be greatly reduced, and the system is not equitable.
Hurley pointed out:
“The Home Loan banks issue debt obligations in the hundreds of billions of dollars. They are the second largest issuer of debt after the U.S. Treasury Department. Their debt is subsidized by all taxpayers….
…because of the government guaranty, the Home Loan Banks offer below-market rates. Second, the Home Loan banks incur zero credit risk in lending to the banks because, even in the rare event of a bank failure, the Home Loan bank has a priority over the FDIC (and the taxpayer) in that bank’s receivership. The upshot is that it is cheaper for the banks to borrow from their Home Loan banks than from their own depositors.”
I wonder if there are people on the inside who might agree with him, because the FHFA has launched a national public conversation about how the system should be reformed. Not being attuned to financial policy I have come to this late, but there is still one more week to comment. [2]
The announcement of FHFA’s “Comprehensive Review” states it “supports affordable, equitable, and sustainable access to mortgage credit”, for home and community investment. But if depositors and taxpayers are subsidizing this pool of credit for all other banking operations, what happens to the original purpose of addressing housing issues? What happens to aspirations for a housing system that influences the evolution of healthy homes and sustainable community development?
Hurley pointed out:
“The Home Loan banks issue debt obligations in the hundreds of billions of dollars. They are the second largest issuer of debt after the U.S. Treasury Department. Their debt is subsidized by all taxpayers….
…because of the government guaranty, the Home Loan Banks offer below-market rates. Second, the Home Loan banks incur zero credit risk in lending to the banks because, even in the rare event of a bank failure, the Home Loan bank has a priority over the FDIC (and the taxpayer) in that bank’s receivership. The upshot is that it is cheaper for the banks to borrow from their Home Loan banks than from their own depositors.”
I wonder if there are people on the inside who might agree with him, because the FHFA has launched a national public conversation about how the system should be reformed. Not being attuned to financial policy I have come to this late, but there is still one more week to comment. [2]
The announcement of FHFA’s “Comprehensive Review” states it “supports affordable, equitable, and sustainable access to mortgage credit”, for home and community investment. But if depositors and taxpayers are subsidizing this pool of credit for all other banking operations, what happens to the original purpose of addressing housing issues? What happens to aspirations for a housing system that influences the evolution of healthy homes and sustainable community development?
Those not attuned to financial system policy should not let their lack of fine command of financial mechanics keep them from weighing in. It does not seem necessary to have a degree or experience in this field to see that something fundamental ought to be asserted – that the system must be oriented to accomplish the purpose for which it was established. Housing is not just our living environment. It is also where we might be exposed to toxins; might waste energy, water and material; and displace natural life. How we make and keep our homes is directly influenced by how the financing flows.
One example is lead paint. Conditioning funding on lead-safety, or providing it where needed, is a no-brainer that would save many young brains from getting poisoned by lead that remains on the walls, in pipes, and in soil. It is hard to imagine there are not ways to accelerate the evolution of lead-safe housing. Another is getting solar on roofs and over parking lots. The tools of financing can be used to advance public health and reduce climate change. They can be used to nurture natural amenities such as trees, and prevent their callous removal so bulldozers can work more quickly. Surely conditions can be set, incentives and accessibility can be configured. It does seem that developers are building mansions, whether people want them or not, because of the economics involved, and this saddles us with expanded footprint, tear-down waste, vegetation loss, and higher energy burden. Is there a way the housing finance system can address these issues? Maybe just a good question can be the best comment. The FHFA call for input notes:
"...the FHLBanks also support low-income housing and community development directly by offering a variety of programs to their members, including the Affordable Housing Program, the Community Investment Program, and the Community Investment Cash Advance Program.
As part of the review process, FHFA will host two public listening sessions and a series of regional roundtable discussions to consider and evaluate the mission, membership eligibility requirements, and operational efficiencies of the FHLBanks. FHFA will hear from stakeholders on the FHLBanks’ role or potential role in addressing housing finance, community and economic development, affordability, and other related issues."
We are all stakeholders if we are housed or care about how people are housed.
FHFA is accepting written comments through October 21, 2022, via FHFA’s website or mailed to: Federal Housing Finance Agency, 400 7th Street, SW, Washington, DC 20024. Submit them online: https://www.fhfa.gov/AboutUs/Contact/Pages/Request-for-Information-Form.aspx.
Recordings of the three listening sessions that have already taken place are available via FHFA’s YouTube Channel:
Boston University and Brookings Institute are holding a symposium on reform of the system in February, 2023: https://www.bu.edu/law/forum-on-the-future-of-the-federal-home-loan-bank-system/
[1] https://www.bu.edu/law/profile/cornelius-k-hurley/
[2] https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Comprehensive-Review-of-the-FHLBank-System.aspx
One example is lead paint. Conditioning funding on lead-safety, or providing it where needed, is a no-brainer that would save many young brains from getting poisoned by lead that remains on the walls, in pipes, and in soil. It is hard to imagine there are not ways to accelerate the evolution of lead-safe housing. Another is getting solar on roofs and over parking lots. The tools of financing can be used to advance public health and reduce climate change. They can be used to nurture natural amenities such as trees, and prevent their callous removal so bulldozers can work more quickly. Surely conditions can be set, incentives and accessibility can be configured. It does seem that developers are building mansions, whether people want them or not, because of the economics involved, and this saddles us with expanded footprint, tear-down waste, vegetation loss, and higher energy burden. Is there a way the housing finance system can address these issues? Maybe just a good question can be the best comment. The FHFA call for input notes:
"...the FHLBanks also support low-income housing and community development directly by offering a variety of programs to their members, including the Affordable Housing Program, the Community Investment Program, and the Community Investment Cash Advance Program.
As part of the review process, FHFA will host two public listening sessions and a series of regional roundtable discussions to consider and evaluate the mission, membership eligibility requirements, and operational efficiencies of the FHLBanks. FHFA will hear from stakeholders on the FHLBanks’ role or potential role in addressing housing finance, community and economic development, affordability, and other related issues."
We are all stakeholders if we are housed or care about how people are housed.
FHFA is accepting written comments through October 21, 2022, via FHFA’s website or mailed to: Federal Housing Finance Agency, 400 7th Street, SW, Washington, DC 20024. Submit them online: https://www.fhfa.gov/AboutUs/Contact/Pages/Request-for-Information-Form.aspx.
Recordings of the three listening sessions that have already taken place are available via FHFA’s YouTube Channel:
- FHFA Listening Session: FHLBank System at 100: Focusing on the Future – Day 1
- FHFA Listening Session: FHLBank System at 100: Focusing on the Future – Day 2
- FHFA Listening Session: FHLBank System at 100: Focusing on the Future – Day 3
Boston University and Brookings Institute are holding a symposium on reform of the system in February, 2023: https://www.bu.edu/law/forum-on-the-future-of-the-federal-home-loan-bank-system/
[1] https://www.bu.edu/law/profile/cornelius-k-hurley/
[2] https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Comprehensive-Review-of-the-FHLBank-System.aspx
RSS Feed
