Probe: FHLBanks Violated Unsecured Credit Limits
By Justin T. Hilley
Several Federal Home Loan Banks violated regulatory credit limits
in 2010 and 2011, even as the risks associated with doing so intensified, according to a recent federal investigation.
The Federal Housing Finance Agency Office of Inspector General found that FHLBanks substantially increased unsecured lending to foreign financial institutions despite indications of heightened risks.
For example, in 2011 one FHLBank extended more than $1 billion in unsecured credit to a European bank despite a downgrade of the bank's credit. That bank later suffered a multibillion-dollar loss.
Read more of this story at HousingWire.
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