Former Seattle Mayor Norm Rice is retiring as president and chief executive of the Federal Home Loan Bank of Seattle, effective March 15...
Former Seattle Mayor Norm Rice is retiring as president and chief executive of the Federal Home Loan Bank of Seattle, effective March 15, at a time when the bank is under increased scrutiny from its regulator.
Rice, 61, has led the bank for six years. His decision to leave comes fewer than two months after the Seattle bank agreed to stricter supervision, including improving its performance and submitting to an independent review of various policies and capabilities.
Rice was not available for interviews yesterday.
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The bank’s board has formed a committee to find a new CEO and plans to hire an outside search firm, said David Bley, the bank’s executive vice president and director of products and services. Bley is leading the team that will manage the bank until an interim CEO is named.
Bley said Rice’s retirement was “mutually agreed to” with the board, and was not required by the regulator. It was not the result of the independent review, which has just begun, he said.
The bank’s regulator, the Federal Housing Finance Board, has said it does not enter lightly into the type of supervisory agreement it signed with the Seattle home-loan bank in December. But currently two of the nation’s 12 home-loan banks — Seattle and Chicago — are operating under such agreements.
Shortly after the Seattle bank signed its agreement, the White House appointed a new chairman, Ginnie Mae President Ronald Rosenfeld, to the Federal Housing Finance Board.
Some industry experts are concerned the moves signal trouble in the home-loan-bank system.
The banks lend money at below-market rates to financial-institution members such as Washington Mutual and Wells Fargo. Unlike other government-sponsored enterprises such as Freddie Mac and Fannie Mae, the federal home-loan banks are owned by their members and do not trade publicly.
The bank reported a 53 percent drop in third-quarter earnings in November.
Bert Ely, a bank consultant and expert on bank finance who was an early predictor of the savings-and-loan crisis of the 1980s, said he views the problems at the Seattle bank and elsewhere in the system as “a transitory problem.”
“The federal home-loan banks are fundamentally very sound institutions,” Ely said. “They should not be seen as troubled institutions.”
James Faulstich, who preceded Rice as head of the Federal Home Loan Bank of Seattle, said yesterday he has “the highest regard” for the former two-term mayor, whom he called a “good friend.”
Under the bank’s supervisory agreement, it must submit a three-year business and capital-management plan to the regulator by Feb. 28. The agreement also calls for an independent review of various aspects of the bank, including management capabilities.
The bank announced Monday it will pay no dividend to members for the fourth quarter of 2004. It will begin a new policy in the first quarter of paying dividends based on the previous quarter’s earnings, subject to limitations.
The Seattle bank’s nearly 400 financial-institution members are in Alaska, Hawaii, Guam, Idaho, Montana, Oregon, Utah, Washington, Wyoming and American Samoa.
Melissa Allison: 206-464-3312 or email@example.com