George does a great job explaining this, and it is worth your time to watch if you're interested. If you're too busy though, the summary goes like this. If you're a bank and you go to the Fed, every other bank knows you went to the Fed. So none of them will trust you anymore, and bank runs might start. If you go the FHLB however, that information is kept quiet. It's only reported on aggregate. The kicker is that FHLB data front runs the Fed data, and by looking at it, you can see exactly when there is going to be a problem. And shocker...FHLB loans have just rocketed through their all time high, significantly surpassing the peak of 2008.
TL;DR
George does a great job explaining this, and it is worth your time to watch if you're interested. If you're too busy though, the summary goes like this. If you're a bank and you go to the Fed, every other bank knows you went to the Fed. So none of them will trust you anymore, and bank runs might start. If you go the FHLB however, that information is kept quiet. It's only reported on aggregate. The kicker is that FHLB data front runs the Fed data, and by looking at it, you can see exactly when there is going to be a problem. And shocker...FHLB loans have just rocketed through their all time high, significantly surpassing the peak of 2008.
Who's ready for the collapse?
Silicon Valley Bank was both the largest borrower and shareholder of the San Fran FHL bank.