Seattle-FHLB promotes MBS Program

The Federal Home Loan Bank of Seattle is currently trying to gain the support of different trade groups for its application to start an MBS program. Through this program, the Seattle bank can buy senior MBS tranches from member banks and thrifts, and it would also grant them the option to resell the securities to outside investors. The proposal has been pending before the Federal Housing Finance Board since July 20.Among the trade groups that officials from the Seattle FHLB have spoken to are the Community Bankers of America and America's Community Bankers. Neither one has taken a position on the issue. This proposal, once approved, would put FHLB-Seattle in closer competition with Fannie Mae and Freddie Mac. However, unlike the two GSEs, the bank would not have an implied guarantee on its securities.