Chicago FHLBank Hit With C&D Order

The Federal Housing Finance Board has finalized a cease-and-desist order that will prevent all stock redemptions at the Federal Home Loan Bank of Chicago without the FHFB's approval.The C&D order also requires the Chicago FHLBank to start phasing out the use of $1 billion in subordinated debt as capital after three years. "The action was necessary to improve the condition and practices of the bank, stabilize its capital" and address certain "supervisory concerns," the Finance Board said. In a letter to members, Chicago FHLBank president Mike Thomas acknowledged that the bank may have to make some changes in its operations. "As the issues in the order are addressed, the board and staff of the bank will continue their work to advance the mission of the bank and to explore appropriate strategic alternatives, including the possibility of a merger with the Federal Home Loan Bank of Dallas," Mr. Thomas said. The Finance Board can be found online at http://www.fhfb.gov, and the Chicago FHLBank can be found at http://www.fhlbc.com.