1. The Power IsNow Radio Interview 1 Lawrence H. Parks Senior Vice President, Legislative and Regulatory Affairs October 4, 2011

2. Historical Context Government sponsored enterprises (FHLBs and Fannie Mae) and the FHA were established in the 1930’s to facilitate mortgage credit -- the Federal Home Loan Banks through depository institutions and Fannie Mae through the mortgage banks. FHA provided insurance. These institutions had the ancillary purpose of growing jobs and building the housing sector. Today the housing sector is 18% of the U.S. economy. 2

5. The FHLBanks issue debt jointly that provides them funding to meet the advance needs of their members. 4

7. The FHLB System is credited with first enabling the 30 year mortgage – a product – most homeowners have. 5

9. FHLB directors do NOT have a duty to maximize shareholder profits; FHLB stock is sold at par and redeemed at par

10. FHLB mission is to provide liquidity and low cost loans to its members 6

12. FHLBanks primary source of liquidity for lenders large & small in height of crisis

13. Over 60% of mortgage lending occurring through large members

14. Nearly 40% of advances are to large members7

17. It is important that real estate professionals make it known that in places like California, large banks are the mortgage lenders and they need access to the FHLBs so as to facilitate low cost mortgage credit to homebuyers in urban, rural and suburban areas. 9

18. Congressional Response to Other Mortgage Crises 1989: The Savings and Loan Crisis and the FHFB The federal government took all retained earnings from FHLBanks to pay for the S&L bailout and established Refcorp bonds. The FHLBanks were required to pay 20% of their income to pay the debt service on the bonds until the bonds are paid off. The 1989 legislation also established the Affordable Housing Program (AHP), which required each Federal Home Loan Bank to set aside 10% of its annual earnings for residential real estate projects for low and moderate income families. 10

20. Finally remember: GSEs are the market currently. Homeownership is critical to wealth accumulation for lower, moderate and middle income families. Government has facilitated homeownership since the 1930’s. Other crisis have existed and the government response was not to end the GSEs. Providing liquidity to banks of all sizes and ensuring broad access to low cost universally available mortgage credit as a critical component of ensuring that low, moderate and middle income families have a chance to own a home. 12

21. Q & A FHLBSF 13

22. The Power IsNow Radio Interview 14 Lawrence H. Parks Senior Vice President, Legislative and Regulatory Affairs October 4, 2011