S&P Downgrades Outlooks For FHLBanks In Mortgage Program
By Dawn Kopecki
Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Standard & Poor's Ratings Service downgraded Monday the credit rating outlooks of three large Federal Home Loan Banks from stable to negative, bringing the total number of FHLBanks with bleak outlooks to five.
The changes for the FHLBanks of Indianapolis, Chicago and Seattle reflect the higher risk the banks are taking on through controversial mortgage purchase programs pioneered by Chicago, S&P said in a statement.
"The banks have been among the most active in growing fixed-rate residential mortgage portfolios as part of the mortgage partnership programs developed in the system," S&P said.
"The higher balance of fixed-rate mortgage loans in the earning asset mix, combined with sizable investments in fixed-rate MBS, has elevated the interest rate risk exposure to a level that is not commensurate with the banks' current `AAA' long-term counterparty credit ratings," S&P said.
S&P affirmed its negative outlooks for the FHLBanks of Pittsburgh and Atlanta.
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