WASHINGTON – A top executive with the Federal Home Loan Banks’ regulator said he resigned last month because he was no longer confident the 12 regional banks were properly valuing their mortgage-backed securities, which have been marked down by billions of dollars.
Charles Bowsher, the former head of the congressional think tank, the General Accounting Office, said he quit as head of the Federal Housing Finance Agency’s office of finance because he was uncomfortable with the way the banks were marking their MBSs to market value.
Six of the banks have reported large losses on their MBS portfolios, especially private-label MBS. While more losses are expected in the coming months. The problems are similar to those experienced by the corporate credit unions, which are grappling with how to report actual losses on billions of dollars in unrealized losses on their MBSs.
NCUA Chairman Michael Fryzel expressed similar concerns two weeks ago when the federal regulator took over U.S. Central FCU and WesCorp FCU, saying the credit union regulator was no longer confident with the numbers the corporates were reporting on their portfolios.
