Research & Reports

Considerations regarding the use of the discount window to support economic activity through a funding for lending program

This paper considers the use of the Federal Reserve’s ability to provide loans to depository institutions under its discount window lending authority in support of achieving its monetary policy objectives through a funding for lending program. Broadly, a funding for lending program could be structured as one in which the Federal Reserve makes ample low-cost funding available to banks or a program in which the Federal Reserve only provides low-cost funding conditional on the banks meeting certain lending targets.

This report provides a general description of how a funding for lending program could be structured along each of these lines and review important considerations, costs, and benefits of any such program. We also review the literature regarding various lending programs implemented previously in the United States by a variety of agencies and abroad by foreign central banks that shed light on the potential effectiveness of funding for lending programs. READ MORE

CFPB Office of Research blog: Update on student loan borrowers during payment suspension

In April, the CFPB released a report on the credit health of student loan borrowers during the pandemic and identified the types of borrowers who may struggle when the federal payment suspension ends. Since that report was released, inflation has risen and delinquencies and balances have increased for consumers across credit products. These developments may signal or contribute to potential payment difficulties for borrowers going forward.

At the same time, the federal government extended the payment suspension through the end of 2022 and announced a new plan to provide one-time targeted student loan debt relief that would reduce the burden for many student loan borrowers and eliminate loans entirely for some borrowers. For borrowers with incomes under $125,000 individually ($250,000 for households), the plan would provide up to $20,000 in debt relief on federally held loans for Pell Grant recipients, and up to $10,000 in debt relief for other borrowers with federally held student loans.

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Federal Housing Finance Agency: Annual Housing Report 2022

The Federal Housing Finance Agency published the Annual Housing Report 2022 which covers activities from 1/2021 to 12/2021.

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Safety and Soundness Act), as amended by HERA, requires FHFA to annually submit a report to Congress describing certain specified activities of the Enterprises. This Annual Housing Report (Report) has been prepared in accordance with this statutory requirement.

The Enterprises perform important roles under their charters in providing a stable source of housing finance that supports access to mortgage credit throughout the nation, including for low and moderate-income families, as well as those in underserved areas. There is currently a widespread lack of affordable housing and access to mortgage credit, problems that are especially concentrated in communities of color. FHFA plays a vital role in both promoting
access to mortgage credit nationwide and protecting the safety and soundness of the housing finance system.

FHFA has encouraged the Enterprises to engage in a number of initiatives that help identify obstacles to accessing mortgage credit, analyze potential solutions, and develop appropriate strategies to improve and maintain availability of mortgage credit for housing in a safe and sound manner. READ MORE

Effects of Monetary Policy on Household Expectations: The Role of Homeownership

The Fed studies the role of homeownership in the effectiveness of monetary policy on households’ expectations. Empirically, we find that homeowners revise down their near-term inflation expectations and their optimism about future labor market conditions in response to a rise in mortgage rates, while renters are less likely to do so. We further show that the monetary-policy component of mortgage-rate changes creates the difference in expectation revisions between homeowners and renters.

This result suggests that homeowners are attentive to news on interest rates and adjust their expectations accordingly in a manner consistent with the intended effect of monetary policy. We characterize these findings using a rational inattention model with two types of households—homeowners and renters. READ MORE

NCUA Releases 2021 Credit Union Diversity Self-Assessment Results

The National Credit Union Administration today released the results of the 2021 Credit Union Diversity Self-Assessment (CUDSA). The NCUA administers the voluntary CUDSA as a tool to help federally insured credit unions assess, guide, and monitor their diversity, equity, and inclusion (DEI) efforts and compare their progress with peer organizations.

Among the highlights for 2021, 61 percent of responding credit unions reported a leadership and organizational commitment to diversity, 56 percent reported taking steps to implement employment practices to demonstrate that commitment, and 31 percent reported monitoring and assessing their diversity policies and practices. Also, for 2021, CUDSA submissions increased by 28.3 percent. As in previous years’ assessments, supplier diversity and transparency of diversity and inclusion practices remained areas for improvement.

The CUDSA helps credit unions evaluate their DEI practices against five core standards:

Organization commitment to diversity and inclusion;
Workforce profile and employment practices;
Supplier diversity;
Practices to promote transparency; and
Approach to self-assessment.