A multiyear restatement of earnings by the 12 Federal Home Loan Banks resulted in a $38 million reduction in retained earnings, according to the FHLBanks' newly issued combined financial report for 2005.It is the first combined audited statement by the banks since the second quarter of 2004, when they started a stock registration process with the Securities and Exchange Commission and ran into questions about their accounting for derivatives and hedging activities. The restatement for 2001, 2002, and 2003 resulted in a reduction in retained earnings of $168 million. But after the sale of certain securities, the net cumulative effect was a $38 million decline in retained earnings. The audited results show that the FHLBanks had $2.5 billion in net income in 2005, up 27% from that of 2005. The 12 banks have $997 billion in total assets. Federal Housing Finance Board Chairman Ronald Rosenfeld said the 2005 financial report shows that the FHLBanks have gotten "their financial house in order." Separately, the Chicago FHLBank received Finance Board approval to redeem $375 million in excess capital stock.

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