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ProfBU OP t1_izxqif3 wrote

Reply to comment by yenmeng in I’m Cornelius Hurley, academic, lawyer, 14-year director of a Federal Home Loan Bank. Ask me anything about the FHLBs. by ProfBU

FHLBs do not underwrite mortgages. They take them as collateral.

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yenmeng t1_izxrna0 wrote

Thanks! Isn’t there a concern that the collateral being held is low-quality though i.e a similar situation to the ‘07-08 crisis? Another question - how can an institution qualify to become a FHLB member? Can anyone apply or are there some sort of capital requirement?

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ProfBU OP t1_izxu3ec wrote

FHLBs need not worry about quality because they pre-empt the FDIC. That's a real problem!

To apply for membership you must be a bank, credit union, insurance co. or CDFI. Helpful?

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yenmeng t1_izxyig8 wrote

Very interesting, this has been insightful. Thank you!

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