July 5, 2023 | less than a minute read

Restrictions on Big Banks' Ability to Borrower from Federal Home Loan Bank Being Considered

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Doug Selph

Partner

Get in touch

Doug Selph

Partner

Given the market turmoil set off by the collapse of SVB, First Republic Bank and other banks earlier this year and the overall jitteryness of markets around continued increases in interest rates, additional layers of regulations on big banks certainly seems wise to me. How soon we forgot the trials and tribulations of the Great Recession in our haste to unshackle banks and other financial institutions from regulations put in place then to combat the worst offenders.

All four midsize US lenders that collapsed since March borrowed billions from FHLBs. Silicon Valley Bank, catering to venture capitalists and tech startups, had borrowed $15 billion from the San Francisco FHLB at the end of 2022. Signature Bank, with clients including crypto platforms, had $11 billion in FHLB loans. First Republic Bank, offering mortgages to millionaires on unusually sweet terms, ended up with more than $28 billion. Before collapsing, Silvergate Capital Corp. held a lifeline of about $4.3 billion in FHLB lending. There are signs that changes proposed by FHFA could have some legs on Capitol Hill — at least with Democrats.