2 Seattle FHLBank Directors to Resign?

The Federal Home Loan Bank of Seattle is weighing whether it should ask two member directors to resign from its board as it continues to investigate "inside information" allegations regarding FHLBank stock sales, industry officials have told MortgageWire.A spokesman for the Seattle FHLBank declined to comment. A source close to the situation said a Seattle FHLBank independent review committee consisting of five nonmember directors is "looking at its options" but "has yet to make a determination." As previously reported by National Mortgage News, the IRC is looking into charges that three of its member institutions had inside information about the condition of the government-sponsored enterprise when they requested stock redemptions from the bank last fall. About $337 million in stock was redeemed in October -- several months before the GSE said it would pay minimal or no dividends and report a $260 million unrealized loss. Washington Mutual of Seattle is one of the three firms, but a spokeswoman for the thrift said it redeemed B(2) FHLBank stock, also known as "excess" stock. The other two institutions -- whose identities are not known -- redeemed "activity" or B(1) stock, which is needed if a member wants to get advances from the FHLBank.