A request by Treasury Department officials to have the Federal Home Loan Banks voluntarily raise the percentage of net income they set aside for affordable housing “will not address the underlying complexities of the housing crisis,” the FHLB chairs said Thursday in a joint letter. They instead urged Treasury officials to work with them to lower existing barriers that hinder FHLBs’ ability to implement affordable housing strategies.
Treasury Secretary Janet Yellen and other top officials have called on FHLBs to spend at least 20% of their net income on affordable housing. Each FHLB is required by law to contribute a minimum of 10% of net income to its affordable housing program. Earlier this year, the FHLBs voluntarily agreed to raise that figure to 15%.
In their letter, the FHLBs suggested other strategies to bolster their institutions’ work to address the problem. They include broadening Community Development Financial Institution access to the FHLBs, working to streamline the administrative and regulatory burden of the affordable housing program, increasing FHLB support of state housing finance agencies, and reforming the Community Investment Cash Advance program and the Community Investment Program.
“We are opposed to any approach that could weaken our capital position, as this would ultimately diminish our ability to fulfill our statutory mandate of providing liquidity to the financial system and supporting housing finance and community development,” the chairs said.
