The Federal Home Loan Banks are a frequently overlooked band of government-chartered cooperatives whose name screams systemic risk with every word. Federal means Uncle Sam. Homes are a declining asset. A loan is money out the door. And banks are the things that get taxpayer bailouts when they’re too big to fail and enough of their loans go bad.
So perhaps it shouldn’t come as a surprise that these 12 regional lenders collectively suffered massive losses last year. What’s astonishing is that you wouldn’t know it by looking at their bottom-line earnings or from the strange way their regulator measures their capital cushions.
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