When it comes to the NCUA adding Federal Home Loan Banks to its final emergency liquidity rule, credit union lobbyist and consultant Geoff Bacino said the banks' so-called "super lien" is a disadvantage.
Bacino, who has served on the boards of both the NCUA and the Federal Housing Finance Agency – the FHFA regulates the FHLBs – said "regulators hate" the FHLBs' superior lien position on collateral pledged against borrowings.
"When an institution fails, the home loan banks are first in line," he said. The FHLB's position is superior to the insurer and insured depositors. Bacino said the position even earned him a call from Sheila Bair in 2008, who was FDIC chairman at the time.
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