Pressure Mounts On FHLB Directors InInsider Trading Probe
SEATTLE - (04/25/05) -- The Federal Home Loan Bank ofSeattle is weighing whether to ask two directors targeted in aninsider trading probe to resign from the regional bank's board. Anindependent review committee of the Seattle bank is looking intocharges that three of its member institutions used insideinformation of the bank's declining financial condition when theyrequested $337 million in stock redemptions last fall, severalmonths before the bank reported a $260 million unrealized loss oninvestments and said it would pay minimal or no dividends for threeyears. Washington Mutual is one of the three institutions thatredeemed its stock but a spokesman insisted it redeemed Class B (2)stock, also known as 'excess' stock. The other two institutions,still unnamed, redeemed Class B (1), or 'activity,' stock, which isneeded if a member wants to get advances from the FHLB. The SeattleBank has 375 financial institution members/owners, including 79credit unions.