Not Ready for Prime Time: Who is the Lender of Last Resort? (S1 E4)
- 5 hours ago
- 2 min read
In this episode of Banking Bad we speak with Sandra Thompson, former Director of the Federal Housing Finance Agency and former Director of Bank Supervision at the FDIC, about one of the most important—but least understood—parts of financial crisis management: the lender of last resort.
The Federal Reserve is supposed to provide emergency liquidity when panic threatens the banking system. But in practice, the Federal Home Loan Banks often become a de facto source of crisis funding. Sandra explains why that overlap can create confusion, delay, and hidden costs when a bank is under stress.
Drawing on her experience at the RTC, FDIC, and FHFA, Sandra walks through the operational problems exposed during the 2023 regional bank crisis, including discount-window stigma, untested collateral-transfer systems, and unclear roles among regulators. She also asks whether the Federal Home Loan Bank System has drifted too far from its original housing mission—and whether its public benefits should come with stronger public obligations.
The result is a timely conversation about liquidity, contagion, housing finance, and whether the financial system is truly prepared for the next run.
Sandra L. Thompson served as Director of the Federal Housing Finance Agency (FHFA) from June 2022 to January 2025, following her nomination by President Joseph R. Biden and confirmation by the U.S. Senate. In this role, she oversaw Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System, regulating more than $7 trillion in mortgage assets. Ms. Thompson also served as the FHFA’s Deputy Director.
Prior to leading FHFA, Ms. Thompson spent over two decades at the Federal Deposit Insurance Corporation (FDIC), ultimately serving as Director of the Division of Risk Management Supervision. She directed the FDIC’s nationwide bank examination and enforcement program for risk management and consumer protection during the global financial crisis. Earlier in her career, she held positions with the Resolution Trust Corporation, Goldman Sachs, and Northwestern Mutual Life Insurance Company.
Recognized as an exceptional crisis leader, Ms. Thompson brings deep expertise in supervision, consumer protection, and risk management, with a career dedicated to maintaining public confidence in the U.S. financial system. She is a graduate of Howard University in Washington, D.C., and currently serves as an Independent Director on the boards of Boeing Employees Credit Union and Protectdiv.