The Federal Reserve Bank of New York has expanded its securities lending program to include agency debt issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, which might help address some liquidity concerns. Barclays Capital researchers said in a recent report that in the short-term they do not believe the Fed's move will have much effect on the agency debt market. But longer term, it might improve liquidity that some investors and dealers fear has diminished due to the Fed's significant purchases of these securities. The researchers said the move is helpful in terms of liquidity because it allows more of agency securities to circulate.
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