The Federal Housing Finance Agency (FHFA) said late Friday that the Federal Home Loan Bank of Seattle remains "undercapitalized" and will not be allowed to redeem or repurchase stock or pay dividends.

At the end of 2004, as the bank struggled with the size of its mortgage purchase program, it said members who wish to redeem their stock must wait five years before receiving their money. But with that time period almost up, the Finance Agency said it would not allow the bank to begin redeeming stock, fearing it could lower its capital base.

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