The New York Federal Reserve announced today that it is purchasing $500 billion in mortgage backed securities in order to support the U.S. housing market.
The New York Fed “began purchasing fixed-rate mortgage- backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae,” the Fed bank said in a statement today. “Selected private investment managers are acting as agents of the New York Fed in these purchases.”
The Federal Reserve has already increased its balance sheet by close to $2 trillion by exchanging Treasury bonds to purchase these impaired mortgage backed securities off of bank balance sheets.
Many critics claim that many banks would be insolvent without the Fed artificially propping them up.
The central bank isn’t disclosing the amount of the purchases and detail are secret at the moment. The Fed claims details will be available on the New York Fed’s website on January 8th and will be updated each Thursday.
The Fed chose BlackRock Inc., Goldman Sachs Asset Management, Pacific Investment Management Co. and Wellington Management Co. to manage the $500 billion purchase of mortgage backed securities.
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