January 19, 2008 – 6:36 pm
The FED admits it has no backup plans if a Government Sponsored Entity (GSE) fails. While most member of the public assume the only GSE’s are Fannie Mae and Freddie Mac, they would be quite suprised to learn the Federal Home Loan Banks also qualify under that list. The recent dividend cut at the FHLB of Chicago proves this chaos is far from over. Its tedious resolution gives Poole credibility on this matter.
What would happen in a failure? No one really knows.
What happens if there is a massive banking collapse?
Legislation provides the Federal Home Loan Banks with a “SUPER LIEN” on any bank assets if a member bank fails. This means the FDIC may not have enough funds to pay depositors after the FHLB Advances have been paid.
One Response to “POOLE STATES FED CANNOT HELP FEDERAL HOME LOAN BANKS”
One should keep in mind that FDIC may also have to pay pre-payment penalties to FHLB on the defaulted mortgages.
It appears that the legislators intended for one GSE to make penalty payments to another GSE. I’m having a difficult time trying to find constitutional authority for that! OOPS, I guess I couldn’t find constitutional authority for the GSEs either….OH WAIT —- how about authority for our entire fake money system?
When will We The People wake up and see that all of this nonsense is just simply going to implode?
By Dennis Johnson on Feb 6, 2008