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Fed's Alone in Buying Mortgage-Backed Paper

By Vincent Farrell Jr.

 About this article:
 In March, the Federal Reserve announced its intention to purchase up to $1.25 trillion of mortgage-backed securities and $200 billion in government agency debt. It has since modified the $200 billion piece to $175 billion. So far the Fed has bought almost $800 billion of the mortgage-backed paper and at the current run rate will spend all the money by the first quarter of next year. Fannie Mae and Freddie Mac, the failed government-sponsored enterprises, are in business to make mortgages, keep some, and package some or most of them for resale so they can then make more mortgage loans. So far this year the amount the agencies needed to finance via securitization has been, figures Carole Berger of Soleil/Luna Analytics in a recent report, about 20% of the total Fed purchases of mortgage paper. Berger's conclusion is the Fed bought materially more mortgage-backed...

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