Home-Loan Banks Draw Focus Amid Rescue Plan

Wall Street Journal (09/09/08) P. A21; Hagerty, James R.
The Fannie Mae and Freddie Mac takeover has raised questions about the 12 regional Federal Home Loan Banks, all of which have long been able to borrow money inexpensively on the bond market because investors assume that the federal government would bail them out in a pinch. James Lockhart, director of the Federal Housing Finance Agency, notes that the dozen banks "have performed remarkably well over the last year" and sees no need for overhaul. The home loan banks are among the world's largest borrowers, with approximately $1.3 trillion of debt outstanding compared with a combined $1.7 trillion for Fannie Mae and Freddie Mac. However, as they have taken on a larger role in funding banks and thrifts amid the ongoing credit crisis, their debt has mushroomed 34 percent since the end of 2006.