Home Loan Banks Backstop Liquidity Crisis

WASHINGTON – The network of 12 Federal Home Loan Banks pumped an additional $110 billion into member banks and credit unions last month to help ease the liquidity crisis in the mortgage market, the banks’ regulator, the Federal Housing Finance Board, reported yesterday. The FHLBs, created during the Great Depression to boost home lending, increased their low-cost advances to fund mortgages to help ease the growing credit crisis in the mortgage market. The FHLB San Francisco said it added $53 billion in additional loans to its members in July and August. The FHLB Atlanta said it increased mortgage advances by $29 billion in August. The FHLB Des Moines boosted advances last month by $2 billion. "As the secondary market for non-conforming loans became less liquid and other funding sources became more expensive, we have been able to support our members with the liquidity they needed," Dean Schulz, president of the San Francisco Bank, said in a statement. The 12 FHLBs provide low-cost funding for mortgages to 8,100 member institutions, including 1,000 credit unions.