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Related Companies FHLB Seattle

Related Documents Industry Document "FHFA Reaffirms Undercapitalized Status of the Federal Home Loan Bank of Seattle" presented on 11/6/2009

Related Articles 8/7/2009 FHFA notifies FHLB Seattle of undercapitalized status

The Federal Housing Finance Agency on Nov. 6 reaffirmed the status of Federal Home Loan Bank of Seattle as "Undercapitalized" under the agency's prompt corrective action regulation.

FHFA acting Director Edward DeMarco reaffirmed the status because of uncertainty concerning the bank's collateral values and potential for future losses on its private-label MBS portfolio.

According to preliminary data, Federal Home Loan Bank of Seattle met all of its statutory and regulatory minimum capital requirements as of Sept. 30. However, the "Undercapitalized" status was reaffirmed because of several factors, including the possibility that modest declines in the value of its private-label MBS could cause it again to fall below its risk-based capital requirement. Moreover, the bank would be in danger of exhausting its retained earnings if credit losses on these securities in the fourth quarter were of similar magnitude to the third-quarter credit losses.

The status reaffirmation continues to prevent the bank from paying dividends, or repurchasing or redeeming any capital stock, along with maintaining the classifications assigned to the bank for the first and second quarters of 2009. All mandatory actions and restrictions that accompanied those determinations remain in effect, including the requirement that it submit an acceptable capital restoration plan.

On Aug. 3, Federal Home Loan Bank of Seattle received notice from the agency that it was "Undercapitalized," based on its risk-based capital deficiency as of March 31.