FHLBank-Seattle Earnings Plunge

The Federal Home Loan Bank of Seattle saw its third-quarter earnings plunge by 53% to $16.8 million due to hedging mistakes and a poor performance in two key products.The FHLBank admitted in a statement that it did not "efficiently manage the funding and hedging of its investments." These investments include mortgage-backed securities and its mortgage purchase program. The MPP, which competes against Fannie Mae and Freddie Mac, was hurt by decreasing volumes and the bank's decision to limit purchases from larger member banks while it enhances what it calls its "financial infrastructure." On Monday, the Federal Home Loan Bank of Chicago, which operates the bank system's Mortgage Partnership Finance program, said it will delay reporting third-quarter earnings because of concerns over accounting for derivatives.