Purchase of Fannie/Freddie Mortgage-Backed Securities
Date:
November 25, 2008
Maximum Amount:
$1,250.00 billion
Amount Spent:
$947.61 billion In a press release on 11/25/2008, the Fed announced a program to purchase mortgage-backed securities from housing-related government sponsored enterprises (Fannie Mae, Freddie Mac, and the Federal Home Loan Banks) to reduce the cost and increase the availability of credit for house purchases. A initial $500 billion maximum amount was set for the program.
In a Fed press release on 3/18/2009, FOMC announced that the due to expectations that inflation could persist for some time below rates that best foster economic growth and to provide increased support to the mortgage lending and housing markets, the Fed would buy an additional $750 billion in agency mortgage-backed securities. With this release the maximum amount was increased to $1.25 trillion.
In a speech given on 8/27/2009, Richmond Fed President Jeffrey Lacker said the Fed may not need to buy the full $1.25 trillion in mortgage-backed securities previously authorized as the economy begins to improve.
In a statement from the FOMC on 9/23/2009, the Fed will "gradually slow the pace" of its purchases of agency mortgage-backed securities in order to promote a smooth market transition. In addition, the FOMC stated that such purchases should expire by the end of Q1 2010.
Notes:
Amount spent indicates holdings of agency debt and mortgage backed securities as of 1/16/2013. See http://www.federalreserve.gov/releases/h41/Current/. Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.