Ex-U.S. regulator gets Home Loan Bank post

The troubled Federal Home Loan Bank of Seattle has named a former federal regulator as its next president and chief executive.

James Gilleran will begin his new job June 1. He replaces interim CEO James Faulstich, who took the helm in February after former Seattle Mayor Norm Rice announced he would leave the post.

Gilleran, 72, stepped down last month as director of the Office of Thrift Supervision, a job he had held since 2001. That office regulates U.S. savings and loans. Previously, Gilleran was superintendent of banking for California from 1989 to 1994, and CEO of the Bank of San Francisco from 1994 to 2000.

Bert Ely, a banking consultant in Alexandria, Va., called Gilleran a good choice for the Seattle home-loan bank.

"He has a lot of experience and credibility as a regulator," Ely said, "and that gives him a certain gravitas in dealing with the Federal Housing Finance Board," the bank's regulator.

The Seattle home-loan bank ran into difficulty last year with a 42 percent drop in earnings and about $260 million in paper losses.

The Federal Housing Finance Board's requirements for correcting the Seattle bank's problems include a three-year business and capital management plan. Last week, the board accepted the plan under the condition that the Seattle bank not pay dividends to members until further notice, and that the bank further limit its stock repurchases.

The bank also is returning to its traditional focus on making loans to members and is getting out of the business of buying mortgages from them.

The mortgage-buying program contributed to the Seattle bank's financial problems, as did poorly performing investments it made in the home-loan-bank system to which it belongs. The system includes 12 banks nationwide, each owned by its members.

"While the bank is facing significant challenges, it appears to be making good progress toward improving its regulatory and financial position," Gilleran said in a news release.

He was not available for interviews yesterday.

Mike Daly, chairman of the Seattle bank's board of directors, said in the same release, "We're pleased to bring on board a regulatory and banking leader of Mr. Gilleran's caliber at a time when the Seattle Bank is working closely with its regulator and moving quickly to improve the strength and stability of its financial position."

At the Office of Thrift Supervision, Gilleran pushed for changes in how it oversaw the Community Reinvestment Act (CRA), a law that requires banks and thrifts to serve the needs of everyone, including low-income people and racial and ethnic minorities.

He drew praise from many in the banking industry for his efforts to change CRA regulation, but many community activists viewed him as a threat to CRA.

"He certainly stirred the waters," Ely said.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com