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Investment Ratings Tank for Home Loan Banks


They hold $1.3 trillion in assets and, chances are, you've never heard of them.

The Federal Home Loan Banks, or FHLBs, were created during the Depression, and are meant to ensure that if the economy were to tank, commercial banks would still have the money to issue home loans. A cooperative of 12 regional banks, the system works like this: banks, thrifts, credit unions and insurers (more than 8,100 across the country) become members and put up collateral; the FHLBs borrow money and lend it to them at a discount.

So where does the subsidy come ...

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