The Home Loan Banks Thrive in Face of GSE Woe

American Banker (08/22/08) P. 3; Sloan, Steven
While investors and lawmakers worry about the possibility of a Fannie Mae or Freddie Mac bailout, the Federal Home Loan Banks continue to report gains. Total profits surged 14.3 percent to $718 million in the second quarter, with four of the 10 banks reporting higher net incomes indicating more than 50 percent increases in profits. Most of the gains are tied to advances to member banks seeking fast, inexpensive liquidity, with these advances rising 5.7 percent to $1.3 trillion since the end of 2007; however, the banks report that a decline in investor confidence in the government-sponsored enterprises could boost the cost of advances. Even so, Moody's Investors Service Inc. analyst Brian Harris says, "The Home Loan banks are . . . viewed as strong, financially sound institutions."