WASHINGTON – While Fannie Mae and Freddie Mac post red numbers, the news isn’t so gloomy for all. For second quarter 2008, 10 of the 12 Federal Home Loan Banks turned a profit.
Of those 10, four reported a profit increase of more than 50%. The Home Loan Bank System’s combined profits for the second quarter increased by 14.3% to $718 million. Despite their name, the FHLBs are not carrying any credit losses tied to housing, as the banks earn interest on advances made to FHLB members. Advances in the system grew 5.7% from the end of 2007 to $1.3 trillion in the second quarter, and accounted for 68% of the system’s total assets.
There are potential clouds, however. One analyst noted that should investors grow skeptical, it could result in a cost increase for the advances of FHLB members in the months ahead. In releasing their second-quarter numbers, each of the Home Loan banks acknowledged that costs could go up if investor confidence deteriorates.
