Regulators Collar FHLB Chicago Over Capital

CHICAGO – The Federal Home Loan Bank of Chicago said yesterday it has received an unusual cease and desist order from its regulator, the Federal Housing Finance Board, which will prevent the Bank from repurchasing or redeeming capital stock without the consent of the regulator, in order to maintain the Bank’s capital. The Chicago Bank is currently in discussions with the Finance Board regarding the terms of a consensual cease and desist order, but we cannot predict whether the Bank's Board of Directors and the Finance Board will reach agreement as to the terms of a consensual order, the Bank reported. Meantime, the Chicago Bank, saddled with more than $34 billion mortgages it acquired under its secondary mortgage market program, Mortgage Partnership Finance, continues to negotiate for a merger with the FHLB Dallas, the Chicago Bank said.