Treasury Purchases $23B in GSE MBS

The Treasury Department purchased $23.2 billion in Fannie Mae and Freddie Mac mortgage-backed securities in November and the Federal Reserve is gearing up to purchase GSE MBS by the end of December in an effort to reduce mortgage rates. Since Sept. 7, when the mortgage giants were placed in conservatorships, Treasury has purchased nearly $50 billion in government sponsored enterprise MBS. The Federal Reserve Board has committed to purchase $500 billion in Fannie and Freddie MBS over the next several quarters and $100 billion in GSE debt. The Federal Reserve Bank of New York completed its first purchase of GSE debt on Dec. 5. It purchased Fannie, Freddie and Federal Home Loan Bank notes with 1-2 year maturities. The Fed does not disclose purchase prices. But GSE regulator James Lockhart called the first purchase operation a "success." Initially, the New York bank plans to purchase GSE fixed-rate, non-callable senior benchmark securities on a weekly basis from its primary dealers.