Goldman Sachs, PIMCO Exit Federal Reserve’s MBS-Purchase Plan

The Federal Reserve Bank of New York said Monday it “streamlined” the list of external investment managers in the agency mortgage-backed securities (MBS) purchase program from four to two. The Fed shed investment managers Goldman Sachs Asset Management and Pacific Investment Management Co. (PIMCO) from the list. It retained Wellington Management Co. for trading and settlement services and as a secondary provider of risk and analytics support. It also retained BlackRock Financial Management as the primary provider of risk and analytics support. “These changes are not performance related,” the Fed said in a media statement. “The New York Fed anticipated that it would make adjustments to its use of external investment managers as it gained more experience with the program. The agency MBS program has matured since it began in January, and the New York Fed has had time to further develop its internal analytical and operational expertise in this area.” The New York Fed said it retained JP Morgan Chase (JPM) as the program’s custodian. JP Morgan, tapped back in February, acts as overseer of the purchase activities of the firms. The federal agency MBS purchase program aims to free up liquidity among mortgage originators and in turn aid the US housing market. It allows for the purchase of mortgage securitizations from government-sponsored enterprises Fannie Mae (FNM), Freddie Mac (FRE) and Ginnie Mae on the so-called “dollar roll” market, which stipulates the securities must be sold back at a later date. Write to Diana Golobay. Disclaimer: The author held no relevant investments when this story was published.

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