Should the FDIC worry about the FHLB?
Subtitle: the impact of Federal Home Loan Bank advances on the Bank Insurance Fund
By: Rosalind L. Bennett, Mark D. Vaughan, Timothy J. Yeager.
Contributors: Vaughan, Mark D.; Yeager, Timothy J.; Federal Reserve Bank of Richmond.
Series: Working paper ;; no. 05-5; Working paper (Federal Reserve Bank of Richmond : Online) ;; no. 05-5.
Publisher: Federal Reserve Bank of Richmond
Published: 2005
Place of publication: [Richmond, Va.]
Language: eng
Format: Electronic resource
Subjects: United States. Federal Home Loan Bank Board.; Deposit insurance -- United States.
Description: "Does growing commercial-bank reliance on Federal Home Loan Bank (FHLBank) advances increase expected losses to the Bank Insurance Fund (BIF)? Our approach to this question begins by modeling the link between advances and expected losses. We then quantify the effect of advances on default probability with a CAMELS downgrade model. Finally, we assess the impact on loss-given-default by estimating resolution costs in two scenarios: the liquidation of all banks with failure probabilities above two percent and the liquidation of all banks  with advance-to-asset ratios above 15 percent. The evidence points to non-trivial increases in expected losses. The policy implication is that the FDIC should price FHLBank-related exposures."--Federal Reserve Bank of Richmond web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on Oct. 27, 2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.