Today, the Fed announced that it (the NY Fed) began purchasing GSE mortgage-backed securities (MBS) today: The Federal Reserve Bank of New York today began purchasing fixed-rate mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Selected private investment managers are acting as agents of the New York Fed in these purchases.
Summary data detailing these operations will be available on the New York Fed’s website beginning Thursday, January 8, 2009, and will be updated on a weekly basis each Thursday.
This program, first announced on November 25, 2008, is intended to support the mortgage and housing markets and foster improved conditions in financial markets more generally.
RW: You can find out more about this program here. Basically the Board of Governors has authorized the purchase of GSE-backed (Fannie Mae, Freddie Mac, and Ginnie Mae) MBS on the open market via the creation of reserve balances. This $500 billion transaction will occur periodically throughout the second quarter of 2009; it should help to drive mortgage rates down farther. Rebecca Wilder