The Federal Home Loan Bank system, the series of government-chartered cooperatives owned by U.S. financial companies, cut its outstanding long-term debt to the lowest since January 2004 as banks curb lending and tap alternative funding sources. The system’s bonds dropped by almost $30 billion last month to $591.8 billion, down from a record $890.7 billion in October 2008, according to data e-mailed today by the system’s Reston, Virginia-based finance office. Total debt, including notes due in less than a year, fell $7.4 billion to $798.6 billion, the least since March 2004, from a high of $1.33 trillion in 2008. The Federal Home Loan Bank system was once the largest U.S. borrower after the federal government, before shrinking below the size of Fannie Mae, the U.S.-supported mortgage-finance company. Prior to tumbling, the collective borrowing of the 12 regional FHLBs soared during the worst financial crisis since the Great Depression as their owners sought funding.
Federal home loan bank debt falls to lowest since start of 2004
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