Building on my previous article discussing the FHLB as a whole, let's now discuss the FHLBNY.

The FHLBank ("FHLB") of New York has advanced $126.25 billion, or $126,250,772--to be more specific--to members within its district in the first quarter of 2023.

With that said, let's jump into more fun facts that caught my eye while perusing the FHLBank of New York's (FHLBNY) March 31, 2023 quarterly report, otherwise known as Form 10-Q, we we build on the fun facts we covered in my previous article.

Remember that FHLBNY is only 1 of 11 federal home loan banks within the FHLB system.

• 71.21% of the $126.25 billion in advances provided by the FHLBNY are due in one year or less
• As a prerequisite to membership and borrowing activity, all FHLB members are required to purchase FHLBNY's capital stock

• FHLB members are required to pledge collateral to fully secure credit products [loans], sometimes "up to the counterparty's total credit limit".

Said another way, some members need to pledge collateral of the exact amount they want the FHLBank to loan them, in order to borrow.

• Interesting forms of collateral that are eligible to secure advances from FHLBNY include:

? one-to-four family and multi-family mortgage loans that are "delinquent for no more than 90 days".

If you missed that, let me clarify. To secure or renew advances (loans) from FHLBNY, members--institutions, insurance companies, etc--can pledge delinquent mortgages as collateral, as long as they are not more than 90 days delinquent.

FHLBNY has $1.8 billion in mortgages in their liquidity trading portfolio.

? FHLBNY capital stock

If you missed that, I'll clarify this one, as well. FHLBNY members must purchase FHLBNY capital stock to be eligible for membership and borrowing within the FHLB system. That same capital stock can then be pledged as collateral to secure new advances, or renew current advances.

• FHLB has $37.5 billion in liquid assets, in addition to:

? $21.1 million as demand cash balances

? $30.9 billion in short-term and overnight investments in the federal funds and resale agreements

? $6.6 billion of high credit quality GSE-issued available-for-sale securities

FHLBanks use available-for-sale (AFS) securities to sell in anticipation of market changes like interest rates, prepayment risks, and other factors.

? $5.7 billion liquidity trading portfolio (U.S. treasury securities)

? Other regulatory liquidity measures in place, deposit liquidity and operational liquidity, and other liquidity buffers

Recall FHLBank NY made over $126 in advances (loans) over this same period.

• Residential mortgage loans are the principal form of collateral for advances

A quick Sidebar about mortgages...

As the moratorium on student debt payments is slated to be lifted in October, housing values declining, employment concerns still front of mind, all in the face of rising interest rates, as well as the federal funds rate, and many more factors that play a role in the overall success of the housing market....

...those mortgages that are the principal form of FHLBNY advances, as well as the [already] delinquent mortgages pledges as collateral, in some cases, the future success of the housing market by way or mortgages is crucial to the success of the FHLB system, which in turn means the fate of the banking system lies heavily on the success of the housing market.

....sounds a lot like 2008 all over again.

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• Insurance companies account for 29.9% of advances borrowed in the first quarter of 2023. Insurance companies pose unique risks not associated with financial institutions, as "there is no single federal regulator for insurance companies".
• The first layer of protection against loss is the liquidation value of the real property securing the loan. Losses that exceed the liquidation value of the real property and any PMI will be absorbed by the FHLBNY
• With the exception of real property taxes, FHLBanks are exempt from federal, state, and local taxation

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So, let's remind everyone about what an FHLB is...

Registered with the SEC and regulated by Federal Housing Finance Agency (FHFA), FHLB is a co-op owned by member financial institutions—the 11 regionally based banks in FHLB are wholesale suppliers of funds to financial institutions.

FHLBs are government-sponsored enterprises (GSEs)--quasi-governmental entity established to enhance the flow of credit to specific sectors of the U.S. economy. Other examples of GSE's are Fannie Mae and Freddie Mac

Privately capitalized without federal funding, FHLB’s mission is to “…provide reliable liquidity to its member institutions to support housing finance and community investment”, as stated by the FDIC.

“The steady supply of lendable funds from FHLBanks helps U.S. lenders invest in local needs including housing, jobs and economic growth.”

Form 10-Q; Federal Home Loan Bank of New York:

https://sec.gov/ix?doc=/Archiv

FHLBNY Membership List:

https://www.fhlbny.com/members/membership-list/