FHFAs Oversight of the Federal Home Loan Banks Unsecured Credit Risk Management Practices, Evaluation Report 2012-005, June 28, 2012
others, European financial institutions, increased substantially
in 2010 and 2011, even as the risks associated with doing so were intensifying. For example, FHFA-OIG found that in 2011 one FHLBank extended more than $1 billion in unsecured credit to a European bank despite indications of increased risks associated with doing so, e.g., the banks credit rating was downgraded and it later suffered a multibillion dollar loss. FHFA internal documents from that period also noted the rapid, system-wide growth in unsecured credit, certain FHLBanks large exposures to particular financial institutions, and the increasing credit and other risks associated with such lending.”
