Foreign banks made 52% of the agency mortgage-backed securities trades during the Federal Reserve‘s purchase program between January 2008 and March 2009, data released Wednesday show. Under Dodd-Frank, the Fed was required to release details on 21,000 individual credit and other transactions conducted to stabilize the market at the height of the financial crisis. In January 2008, the Fed began purchasing and selling agency MBS – backed by Fannie Mae, Freddie Mac or Ginnie Mae loans – to lower long-term interest rates and ease financial conditions at the time. The Fed and participating financial institutions traded $2.45 trillion worth of agency MBS in the purchase program. Of that, $1.27 trillion in agency MBS was traded by foreign banks, led by the $410 billion by German-based Deutsche Bank and the $382 billion by the Switzerland-based Credit Suisse. Other foreign banks receiving aid from the U.S. included the $153 billion in trades from Barclays Capital, $90 billion from BNP Paribas, $82 billion from the Royal Bank of Scotland and $7.2 billion from the Canadian RBC Royal Bank. When the program ended, the Federal Reserve purchased $1.25 trillion in agency MBS from all participating banks. The Fed said many of the transactions in the disclosure, conducted through a variety of broad-based lending facilities, provided liquidity to institutions and markets through fully secured, mostly short-term loans. Other revelations can found digging through the files, such as the 60% of loans through the Troubled Asset-Backed Securities Loan Facility that have already been repaid. American banks were far from the only beneficiaries of U.S. aid and not just through the agency MBS purchase program. For instance, data show details of four swap transactions between the Fed and the Bank of England to support the Emergency Liquidity Assistance provided to the Royal Bank of Scotland in October 2008. Write to Jon Prior.
Most Popular Articles
Thanks to increases in home prices in 2019, the Federal Housing Administration loan limit will increase for nearly all of the country in 2020.
2019 has been a year of tremendous audience and product growth for HousingWire and we couldn’t be prouder. But we’re not ready to rest on our laurels. Far from it. In fact, 2020 promises to be an even bigger year for HousingWire.