FHLB-Seattle to File Recapitalization Plan

The troubled Federal Home Loan Bank of Seattle reported a $34.3 million loss for the second quarter, up 50% from the first quarter, and it plans to submit a recapitalization plan to the GSE regulator before Aug. 24. The Federal Housing Finance Agency has classified FHLB-Seattle as "undercapitalized" due to continuing losses on its investments in private-label mortgage-backed securities. FHLB-Seattle said it held $3 billion of regulatory capital as of June 30. "Although the bank did not comply with its risk-based capital requirements as of June 30, 2009, the bank was in compliance with all of its regulatory capital requirements as of July 31, 2009," the bank said in releasing its second quarter results. It took $61.8 million in credit-related impairment charges in the second quarter, compared to a $71.1 million other than temporary impairment credit-related charge in the previous quarter. "We have seen some recent improvement in the market values of some of the mortgage-backed securities we own," FHLB-Seattle president and chief executive Richard Riccobono said. The $50 billion-asset bank has $5.3 billion invested in private label MBS, mostly backed by Alt-A and subprime loans.