For all the talk of the inherent risks of fixed-rate mortgages, the final blunder that put the Federal Home Loan Bank of Seattle in its current pickle involved a different sort of investment.

Last summer it bet on interest rates by buying gobs of callable debt of other Home Loan banks and financing the investment with borrowings that were partly short-term and mostly noncallable.

Limited Time Offer

Save $400 off your subscription. Special offer ends April 30, 2017.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.