President's Report

July 3, 2007

At the Bank

Advances Averaged $60.1 Billion

In May, advances averaged $60.1 billion, up $800 million from April. Month-end advances totaled $60.5 billion. With the yield curve working out of its inversion, a number of member lenders are reconsidering their pricing tactics on both sides of the balance sheet, specifically calculating the true cost of raising deposits in order to maximize net interest margins. The FHLBNY offers a variety of competitively-priced advances with flexible structures and maturities to assist with smart asset/liability management.

Should you have any questions on how the FHLBNY can help meet your liquidity needs, please contact Jim Gilmore, Senior Vice President, Head of Sales and Marketing, at 212-441-6812 or Adam Goldstein, Vice President, Director of Sales and Marketing, at 212-441-6703.

Nominations Period Opening for 2007 Election of Directors of the Home Loan Bank

On July 9, 2007, nomination certificates and related information regarding the 2007 Director election process will be mailed to all eligible participating stockholders in New Jersey and New York. Two seats from New Jersey and two seats from New York are up for election this year. No seats for Puerto Rico and the U.S. Virgin Islands will be up for election this year. Each of the individuals elected will serve a three-year term starting on January 1, 2008. The deadline to return your nomination certificates to the FHLBNY is 5:00 p.m. on August 8, 2007.

A Comment on the Subprime Mess

The front page of the June 27 Wall Street Journal had a provocative yet accurate headline Lending a Hand: How Wall Street Stoked the Mortgage Meltdown. The article pointed out that a generation ago housing finance was different bankers took in deposits, lent out money to homebuyers, and collected interest and principal until the mortgages were paid. Wall Street was not much involved. Now it plays a central role.
Wall Street firms provide working capital that allows thousands of loosely regulated mortgage firms to make loans. After lenders sign up consumers for home loans, investment houses pool the income streams into mortgage-backed securities. They are then sold to yield-hungry investors around the world.

Earlier this month, the American Banker and the Washington Times ran my commentary piece in which I make the same observations. But I added the point known to community member lenders of the Home Loan Bank: if the community banker had been involved in the origination of these mortgages in the first place, we would not be facing the subprime hurricane that is beginning to make landfall and that will, in the end, cause the loss of many homes, billions of dollars, and devastate many, many lives.

I believe it is important that we remind our policymakers at the local, state, and federal levels that, whatever solutions may be applied to the subprime mess, the community bankers will continue to be there to make responsible loans. Yes, the community banker has access to the world’s capital markets through the Home Loan Banks and other regulated government-sponsored enterprises. But the community banker never loses his or her focus on the people on Main Street who are customers and neighbors today and every day.

Attached is a copy of my commentary “Subprime: Not a Wonderful Life” that ran in the Washington Times on June 6, 2007. I hope you take a few minutes to read these observations on the subprime fiasco.

The Home Loan Bank team thanks you for your use of our products and services to expand the responsible availability of mortgage credit, to compete effectively in your market, and to promote strong communities. And we hope each of you has an enjoyable weekend in Celebration of Our Nation’s Birthday.


Alfred A. DelliBovi
President & CEO

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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This report may contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. These statements may use forward-looking terms, such as “projected,” “expects,” “may,” or their negatives or other variations of these terms. The Bank cautions that, by their nature, forward-looking statements involve risk or uncertainty and that actual results could differ materially from those expressed or implied in these forward-looking statements or could affect the extent to which a particular objective, projection, estimate, or prediction is realized. These forward-looking statements involve risks and uncertainties including, but not limited to, regulatory and accounting rule adjustments or requirements, changes in interest rates, changes in projected business volumes, changes in prepayment speeds on mortgage assets, the cost of our funding, changes in our membership profile, the withdrawal of one or more large members, competitive pressures, shifts in demand for our products, and general economic conditions. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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