Treasury GSE mortgage-Backed Securities Purchase Program

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The Treasury GSE mortgage-Backed Securities Purchase Program

The Treasury purchased mortgage-backed securities of mortgages held by Fannie Mae and Freddie Mac in an effort to stabilize the market for MBS and stimulate mortgage lending. The program was started in Sept. 7, 2008 ended on Dec. 31, 2009 after purchasing about $220 billion of MBS and was authorized under the Housing and Economic Recovery Act. The securities have maturity terms of 15 and 30 years and Treasury may hold them to maturity, so the program balance will take some time to reduce to zero.


Wall Street Bailout Accounting
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TREASURY GSE MORTGAGE-BACKED SECURITIES PURCHASE PROGRAM
Balance Sheet
Disbursed*: $220B [1]
Current outstanding: $101.0B [2]
Public Funds
Maximum at-risk: $314B [3]
Current at-risk: $101.0B [4]

* See the methodology and glossary for definitions of "disbursed," etc.

Funding agency and aid type

The funding agency was the Treasury Department.

Purchasing GSE mortgage-backed securities from investors.

Who benefits

Background

SIGTARP:[5]

“GSE MBS Purchase Program — Total Potential Support: $314 Billion. HERA also gave Treasury the authority to purchase GSE MBS in the open market, and Treasury announced the program on September 7, 2008. According to Treasury’s FY 2010 budget, “The function of the GSE MBS Purchase Program is to help improve the availability of mortgage credit to American homebuyers and mitigate pressures on mortgage rates. To promote the stability of the mortgage market, Treasury has purchased GSE MBS in the secondary market. By purchasing these guaranteed securities, Treasury sought to broaden access to mortgage funding for current and prospective homeowners as well as to promote market stability.”

Notes

Treasury announced the program’s end on Dec. 31, 2009, estimating that the program had purchased $220 billion of MBS with a range of maturity terms. The program was authorized under the 2008 HERA bill.[6] Treasury said it may hold the securities to maturity.[7] The program holds 15 and 30 year securities.[8]

Articles and resources

Related SourceWatch articles

References

  1. Disbursed figure is from Treasury estimate of total securities purchased. This figure is greater than the outstanding/currently at-risk figure because some securities are sold off. The outstanding/currently-at-risk figure will eventually decline to zero. Source: U.S. Treasury Department News Release, “Treasury Issues Update on Status of Support for Housing Programs”, Dec. 24, 2009,
  2. U.S. Treasury Department, “Monthly Treasury Statement of Receipts and Outlays of the United States Government (MTS), - June 2011", Line item “Department of the Treasury: GSE Mortgage-Backed Securities Purchase Program”. Monthly Treasury Statements are available at http://www.fms.treas.gov/mts/index.html
  3. Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), “Quarterly Report to Congress July 2009”, p. 154.
  4. See outstanding.
  5. SIGTARP July 2009 report, p. 154.
  6. U.S. Treasury press release, “Treasury Issues Update on Status of Support for Housing Programs”, Dec. 24, 2009, accessed Mar. 10, 2010.
  7. U.S. Treasury, “FACT SHEET: GSE MORTGAGE BACKED SECURITIES PURCHASE PROGRAM”, Sept. 7, 2008. accessed Mar. 10, 2010.
  8. See the “Portfolio by Month” downloadable file under the “MBS Purchase Program” at http://www.financialstability.gov/roadtostability/homeowner.html accessed Mar. 10, 2010.

External resources

External articles

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