This story appeared in Bank Digest.
The Federal Home Loan Banks, Fannie Mae and Freddie Mac all face continuing challenges in dealing with the causes and results of the financial crisis, according to Federal Housing Finance Agency (FHFA) Director James Lockhart. Addressing the National Press Club in Washington D.C., on the anniversary of his agency’s creation, Lockhart noted that the institutions’ holdings of downgraded private label securities pose a threat to their financial health. The FHFA is looking into creating an insurance fund for the FHLBanks, he said. Referring to Fannie Mae and Freddie Mac, Lockhart said that “in the current economic environment their condition and function is critical.” He also discussed whether, in the future, the enterprises should become government agencies, be fully privatized or retain their current form in an improved manner.