Seattle FHLBank Cans 2 in Insider Scandal

The Federal Home Loan Bank of Seattle announced Thursday that two of its directors -- Roy Whitehead of Washington Federal and Allan Landon of Bank of Hawaii -- have resigned in connection with questionable GSE stock repurchases their institutions engaged in last fall.The thrifts the two men work for have agreed to restore the repurchased stock to the FHLBank. The April 25 issue of National Mortgage News broke the news that the Seattle FHLBank would likely fire two directors. In a statement, the FHLBank said the two men did not comply with conflict-of-interest rules and that there was "the appearance of impropriety" with respect to the stock repurchase requests of $25 million by BoH and $48 million by Washington Federal. Messrs. Landon and Whitehead are member-directors of the government-sponsored enterprise, and allegations have been made that the two (as directors) may have had access to nonpublic information about the deteriorating financial condition of the bank. The GSE noted that the two men disagree with the FHLBank's conclusions. (See the May 16 issue of NMN for the full details.)