WASHINGTON — Federal Housing Finance Agency Director Sandra Thompson said that taxpayers are “absolutely” stakeholders in Federal Home Loan Banks, an issue that’s increasingly of interest to policy watchers as revelations about the ways that crypto banks have used the FHLBs to offset plummeting deposits.
The issue of how much government support FHLBs receive is a tricky topic, especially as the banks receive more scrutiny from the FHFA. Thompson, speaking Friday at an event hosted by the Brookings Institution, noted that they benefit from their close relationship with the government.
“Certainly the debt that’s issued has the implied guarantee, as far as I can tell, implied from the United States government,” she said. “As far as I can tell, the home loan banks aren’t paying taxes, as far as I can tell there are a number of benefits that the home loan banks get.”
The Federal Home Loan Bank council, meanwhile, says that the banks receive no taxpayer support.
The banks have come under criticism lately for their apparent role as a lender of last resort for crypto bank Silvergate, which saw its deposits drop dramatically as crypto exchange FTX unwound, a move from Silvergate that drew the attention of some lawmakers.
Given the FHLBs’ unusual relationship with the government, Thompson also addressed concerns that those banks’ executive compensation is too high, compared to, for example, a government salary.
“I do have views in regards to executive compensation, but my views will be articulated at the end of the review period,” Thompson said.
She cautioned that FHFA doesn’t have much ability to sway compensation at FHLBs.
“At FHFA, we don’t have the statutory authority to set the pay or to establish pay ranges, but we do have authority to deny,” she said. “We are limited in what we can and cannot do.”