WASHINGTON — The Federal Home Loan Bank of San Francisco is exploring ways to use $40 million it received as part of a private-label securities settlement to support small-business development and job creation to help future homebuyers.
The San Francisco bank is holding roundtables in Las Vegas, Phoenix, Los Angeles, Sacramento and San Francisco to get local and regional input on ways to stimulate higher-wage jobs. The first roundtable was held Thursday in Las Vegas.
The 11 Home Loan banks generally stick to providing liquidity to local banks and thrifts to support mortgage lending in their districts. But the San Francisco bank opted to take a unique approach to increasing homeownership opportunities due to wage stagnation.
"One of the biggest challenges for our nation is creating jobs that offer wages high enough to allow working families to raise their children and purchase a home in a safe, nurturing community," Tad Lowrey, the chairman of the San Francisco bank, said in a statement. "The FHLBank San Francisco is exploring best practices to support programs and initiatives that will train local residents for good jobs or support their efforts to expand small businesses."
The funding comes from a $459 million settlement the San Francisco bank received as a result of litigation over private-label securities. Wall Street banks sold private-label securities to the Home Loan banks during the subprime mortgage craze, which resulted in huge losses following the 2008 housing bust.
Larry Parks, a senior vice president at the bank, is in charge of the roundtables. As part of the initiative, Parks expects to explore ways to work with intermediaries, such as Federal Home Loan Bank System member banks, venture capital firms and hybrid entities, to provide financing for competitive industries and help them grow.
"This is a bottom-up approach to tell us what the best practices are," Parks said in an interview. "We will look at what makes sense for our business model, what makes sense for our regulator and move forward."
The bank will also be tapping the Aspen Institution for its expertise and the two will work together on a paper about the roundtables and their findings.
"We will put together a white paper that comes out of this whole experience, and that should influence any kind of funding we do," Parks said.