WASHINGTON – The Treasury Department announced it finished selling $225 billion worth of mortgage backed securities issued by Fannie Mae and Freddie Mac from banks and credit unions – and earned $25 billion on the program.
The earnings came from interest payments, principal and rising prices for the securities, which the Treasury Department bought back to help prop up the secondary mortgage market.
“This program helped support the housing market during a critical moment for our nation’s economy and delivered a substantial profit for taxpayers,” said Mary Miller, assistant secretary for financial markets.
Treasury bought $225 billion of MBS in 2008 and 2009 to add liquidity to the faltering mortgage market. The buyback, which began under the Bush administration and expanded once President Obama took office, was only for MBS insured by Fannie and Freddie, not private label MBS such as the ones that sunk the five corporate credit unions.
The Federal Reserve also bought back huge portfolios of troubled assets during the crisis. Last week it reported a profit of $77.4 billion last year, mostly because of a dramatic increase in its balance sheet due to its policy of buying up securities to help stimulate economic growth. The central bank’s profits came from interest on the $2.9 trillion worth of assets now on its books, much of it Treasuries and mortgage backed securities purchased during the financial crisis and its aftermath.
The Fed still has about $850 billion in mortgage debt on its books, along with about $1.7 trillion in Treasury debt.
