10/31/2024 | Press release | Distributed by Public on 10/31/2024 07:32
Washington, D.C. - In a letter published today, the Coalition for Federal Home Loan Bank Reform (CFR) called on Congress to require the Federal Home Loan Banks (FHLBanks) to contribute at least 30 percent of their net income each year to support community development, including at least 20 percent to Affordable Housing Programs (AHP).
Over sixty national and local organizations signed on to the letter supporting Congressional action to enforce increasing these contributions, which would spur housing construction and help support communities across the nation. In the past year, the Biden-Harris Administration, the Federal Housing Finance Agency (FHFA), Senator Catherine Cortez Masto, and Senator Elizabeth Warren have also publicly requested that the Banks increase their AHP contributions.
The Coalition's letter highlights how the FHLBanks are uniquely positioned to help the millions of U.S. families struggling to afford housing. Congress chartered the FHLBank System in 1932 to support fair and affordable housing. In 1989, the Financial Institutions Reform, Recovery, and Enforcement Act added the AHP to the FHLBanks' duties, mandating that each Bank dedicate 10 percent of its net income to these programs. Today, the Congressional Budget Office estimates that the FHLBank System receives $7.3 billion in indirect government subsidies each year. The Banks increased their retained earnings by $3.3 billion last year, and spent $3.4 billion on paying out dividends to members, demonstrating they could very feasibly have contributed more to housing. Leveraging these profits to address the affordable housing shortage and community development needs would realign the FHLBanks with their original purpose and ensure proper stewardship of taxpayer dollars.
Congressional action on this matter is crucial, as the FHLB Presidents stated in their August 2024 letter to the U.S. Treasury Deputy Secretary Adeyemo that they would not increase AHP contributions unless directed by Congress. Over the past two years, the FHLBanks pledged to voluntarily dedicate an additional 5 percent of net income to AHP above the statutory 10 percent. They have consistently fallen short of even this modest goal, averaging only 2.5 percent in voluntary contributions above their legislatively mandated amounts.
About the Coalition for Federal Home Loan Bank Reform : The Coalition for Federal Home Loan Bank Reform is a non-partisan coalition of 17 national organizations dedicated to shaping reforms aimed at enhancing the ability of the FHLB system to address the nation's unmet affordable housing and community development needs.