FHLBank San Francisco President Backs Federal Action Allowing Expanded Role for FHLBanks in Supporting Local Infrastructure Spending
LOS ANGELES – April 14, 2022 – Federal Home Loan Bank of San Francisco President and CEO Teresa Bryce Bazemore wants Congress and regulators to allow Federal Home Loan Banks (FHLBanks) to help communities maximize spending from the $1.2 trillion Infrastructure Investment and Jobs Act. Appearing with Rep. Maxine Waters (D-CA), Bazemore made her comments at the 20th Annual Mayoral Housing, Transportation & Jobs Summit.
At the event on Wednesday, Bazemore said, “It would be an opportunity for us to support the infrastructure spending in the (infrastructure) bill that's already been passed. We believe that we can and should be part of that.”
With a series of small changes, such as reauthorizing the FHLBanks ability to write Letters of Credit for municipalities selling tax-exempt bonds, the FHLBanks can support local infrastructure projects, including water and wastewater treatment facilities, bridge and road repairs, youth and senior centers, schools, healthcare facilities, and other priority economic development. Bazemore said the provisions are part of the revised Build Back Better legislation being negotiated in the Senate.
Further, she noted that when the FHLBanks previously had authority to support local bonding “we were able to, as a (FHLBank) System, support $4 billion in infrastructure spending.”
Bazemore and Rep. Waters participated in a wide-ranging discussion of housing needs during a panel discussion moderated by Mary Leslie, president of the Los Angeles Business Council, which sponsored the event. Leslie lauded Rep. Waters for her commitment to increasing affordable housing in Los Angeles and across the country. Rep. Waters cited the housing provisions she placed in the House version of the Build Back Better legislation but acknowledged that some Senators are pushing to reduce the spending.
Rep. Waters talked about the critical need for more Section 8 housing vouchers that help renters. “Everybody knows about the number of people who have been standing in line for Section 8 vouchers,” she said. “They're so very much needed, and we have serious problems. Not only is the need extraordinarily great. Many of those who finally achieve getting Section 8 vouchers, can't get landlords to take them.”
Rep. Waters and Bazemore discussed the legacy of housing discrimination against African Americans and other minorities, with Rep. Waters saying she is working on reforms to address the bias in the appraisal industry. “I have a bill on the problem with appraisals,” she said, adding that studies show Black homeowners encounter appraisals that are less than half the actual value of their homes. Rep. Waters also said that House-passed legislation includes a down payment assistance program because Blacks can often make monthly mortgage payments but can’t afford the upfront cost of buying a home.
Bazemore called data showing the decline in Black homeownership “a hugely troubling concern” because of the efforts by a lot of people “to increase the amount of Black and Brown home ownership over the years. So, it's truly troubling to see that we've taken such a big step backwards for a lot of reasons that Chairwoman Waters has talked about.”
Noting that home ownership is the biggest wealth builder in Brown and Black communities, Bazemore said FHLBank San Francisco recently launched two programs aimed at increasing minority homeownership. The Empowering Black Homeownership program makes $1 million available to help expand capacity of HUD-approved housing counseling agencies to aid aspiring and at-risk homeowners in communities of color. Moreover, she said FHLBank San Francisco is “working with the Urban Institute to address some of the systemic challenges” limiting home ownership by people of color.
Specifically, she cited mortgage underwriting, possible biases in technology and student loan debt as issues that need to be addressed. “Why is it that (someone) can pay 50% of (their) income, and be a constant, good payer for rent, but can't qualify for a mortgage?” she asked. Bazemore said there is “inherent bias” in some technology used to underwrite mortgages, because they rely on data that includes past bias. On student loans, she said, “African Americans have larger student loan debt because…their parents were locked out of homeownership, which would've generated (wealth) to help pay for college.”
Bazemore added that each of the 11 FHLBanks fund their Affordable Housing Program by contributing 10% of their net profits annually. A total of $1.1 billion in assistance from the San Francisco Bank alone has gone to community organizations and developers to expand the supply of affordable housing. “We are very committed,” she said. “And that mission is very important.”