Seattle FHLBank Biz Plan Suspends Dividends

The Federal Home Loan Bank of Seattle has suspended all dividends on its stock as part of a three-year capital plan approved by its regulator, the Federal Housing Finance Board.Announced Thursday morning, the approved capital and business plan is designed to shore up the government-sponsored enterprise's finances by, among other things, focusing the bank on its core mission activity of providing advances to member financial institutions. (FHLBank members are active mortgage lenders.) The bank recently reported that its advance activity plunged 24% last year. The Seattle FHLBank earned $82.7 million in 2004 but also has $260 million in unrealized losses on its balance sheet. The GSE recently fired two member directors in connection with questionable FHLBank stock repurchases their institutions engaged in last fall.