JPMorgan, your local bank?

The Federal Home Loan Bank System (FHLB) was set up “to strengthen communities. The System directly benefits consumers by helping to ensure competition in the housing-finance market.”  But it does not appear that the focus of some of these banks is not on the local community, since the largest borrowers from these banks are JPMorgan, Bank of America and Citigroup. Apparently these banks are considered local in more than one FHLB area as they have, in fact, borrowed from more than one of these banks.  For example, JP has borrowed from three of these banks, one of which, FHLBank of Cincinnati, has given JP 65.8% of all of its advances. I guess since this bank serves Kentucky, Ohio, and Tennessee it should serve the local JP affiliate.

The TBTF banks are not the only recipients of FHLB largesse.  Sallie Mae, which is not a government operation,obtained an $8.5 billion line of credit from a Federal Home Loan Bank. Then, it borrowed on that line of credit at 0.23 percent and made student loans at 25-40 times that rate.