As the credit crisis continues, the Federal Reserve on Tuesday said it will buy up to
$600 billion in mortgage-backed assets. The Fed will buy up to $100 billion in direct obligations from government-sponsored mortgage giants Fannie Mae and Freddie Mac, and the Federal Home Loan Banks. It will also take on $500 billion in mortgage-backed securities.
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Also, under the
Term Asset-Backed Securities Loan Facility,
or TALF, the Federal Reserve Bank of New York will lend up to $200
billion on a nonrecourse basis to holders of certain AAA-rated asset-backed securities, or ABSs,
backed by newly and recently originated consumer and small-business
loans. The Treasury Department will provide $20 billion of credit
protection to the Federal Reserve in connection with the facility,
using its authorities in the Emergency Economic Stabilization Act of
2008.
A CBS report noted the government's decision
overshadowed a report that the nation's gross domestic product declined in line with expectations. -
Baz Hiralal
Comments
Fed spending $100B to buy loans isn't much different than if the government spent $100B to buy SUVs off the dealer lots. These investments are not helping America, and its companies, become more competitive. We need to focus our assistance on moving forward with new business models that enhance competitiveness so companies can succeed in global markets. Read more at http://www.ThePhoenixPrinciple.com