Fed to ramp up purchases of mortgage securities | The Daily Star
12:00 AM, January 01, 2009 / LAST MODIFIED: 12:00 AM, January 01, 2009

International Business News

Fed to ramp up purchases of mortgage securities

The Federal Reserve said Tuesday it would begin buying mortgage-backed securities in early January under a previously announced plan to purchase up to 600 billion dollars of these assets.
The program was announced in late November as another step in fighting a credit crunch stemming from the collapse in housing that has now engulfed the financial sector and is choking economic activity.
"The program is being established to support the mortgage and housing markets and to foster improved conditions in financial markets more generally," the Fed said in a statement.
The New York Fed, which will carry out the purchases, said it had selected four investment managers for the program: BlackRock, Goldman Sachs, PIMCO and Wellington Management Company.
"The selection criteria were based on the institution's operational capacity, size, overall experience in the MBS (mortgage-backed securities) market and a competitive fee structure," the New York Fed said.
The contract for a custodian has not yet been awarded.
The central bank has already begun purchasing up to 100 billion dollars in mortgage-backed securities on its own and will buy up to 500 billion more through these investment firms.

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