With discussions up in Congress for a combined new regulator for the Federal Home Loan Banks as well as Fannie Mae and Freddie Mac, one issue that has also been deliberated is the possibility of FHLBanks using securitization for risk mitigation. Although some have warmed to the idea, many public officials and trade groups are concerned about the lack of securitization know how and the danger that this would divert away from the real goal of the FHLBanks, which is to be a liquidity source for its members.

Sources said that even if the 12 FHLBanks are not particularly opposed to securitization - as evidenced by the Counsel of Federal Home Loan Banks vote agreeing that regulator Federal Housing Finance Board has the authority to allow the FHLBanks to securitize - members do not want the issue brought up before Congress, as they fear this would hinder the passage of the much-anticipated GSE Regulation bill.

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