The Federal Housing Finance Board last week voted unanimously to let its Office of Finance continue borrowing through the rest of the year. Without the new authority, the office's ability to issue new debt would have expired March 31.
The Office of Finance issues debt on behalf of the Federal Home Loan Bank System's 12 regional banks and historically has been authorized to issue debt for a full year.
But concerns over how the Home Loan banks use the funds prompted the board in December to limit that power. Lawmakers have criticized the banks for using their low-cost government borrowing to invest in short-term money market accounts rather than to make advances for home loans.
Finance Board Chairman Bruce Morrison said the banks' borrowing practices remain a problem, but he wants to expand the types of housing- related investments they can make, rather than restrict borrowing. On March 25 the agency is expected to release a report detailing ways to improve the system's investment policies.