Under regulatory pressure, the Federal Home Loan Bank of Seattle is exiting the mortgage purchase business in an attempt to restore the bank's profitability and submit a business and capital plan that is acceptable to its regulator.The bank's board of directors and senior management are developing an "exit strategy" for the Mortgage Purchase Program, the government-sponsored enterprise said, as a way to reduce operating costs and exposure to interest rate risk. The Seattle FHLBank, which has been operating under a supervisory agreement since Dec. 10, also announced that the Federal Housing Finance Board has extended its deadline for submitting a business and capital plan until April 5. The original deadline was Feb. 28. The Seattle bank recently replaced its president, at least temporarily, by bringing back James Faulstich. Mr. Faulstich previously served as president and chief executive from 1979 to 1999. The FHLBank also announced that it will allow member banks and thrifts to use their "membership stock" as collateral for advances. "This change will allow members to access about $560 million in existing stock to support up to $16 billion in new advance borrowings," the bank said.

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