CHICAGO – The Federal Home Loan Bank of Chicago, still struggling with large holdings of underwater mortgage-backed securities, said it expects to report a $65 million for 2009, down from a loss of $119 million for 2008.
Last year’s loss, said Matt Feldman, president of the Chicago Bank in a letter to members, was due to a whopping $437 million loss, so-called other-than-temporary impairments, on its private-label MBSs. Those losses more than offset $570 million in net interest income for 2009.
The Chicago Bank continued to trim its secondary market mortgage partnership finance program during the year, as directed by its regulator, from $32.1 billion to $23.8 billion at year-end. The FHLB increased its allowance for loan losses on those mortgages from $5 million to $14 million at the end of 2009.
The Chicago Bank disclosed a new weakness, the fact that 19 of its member institutions failed in 2009. At the time of their failures, the FHLB had a total of $460 million in advances and other credit outstanding to these members.
