During a recent meeting, Deputy Secretary of the Treasury Wally Adeyemo urged the leadership of the 11 Federal Home Loan Banks to do more to support the development of affordable housing, the Treasury Department said Tuesday.
Adeyemo met last week with FHLB leaders and Federal Housing Finance Agency Director Sandra Thompson to discuss steps to support affordable housing, according to a Treasury Department summary of the meeting. He told the FHLBs to deploy “more of the significant resources at their disposal” to expand housing supply. Specifically, he called on FHLBs to spend at least 20% of their net income on affordable housing. He also called on them to use a portion of their existing unrestricted retained earnings to create a pool of capital that can lower the cost of new housing production across the country.
Treasury Secretary Janet Yellen made a similar argument in June when she cited the 20% figure and urged the FHLBs to prioritize new construction. “If this level of commitment had been in place over the past five years, the FHLBs would have contributed nearly $2 billion more to housing programs than was required by law,” she said.
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 contribute a total of 15% of net income to affordable housing and community development initiatives.
