Treasury to wind down MBS with up to $10 billion in monthy sales
The Treasury Department will begin offloading its portfolio of $142 billion in agency-guaranteed mortgage-backed securities by selling up to $10 billion worth monthly, the agency said Monday. The Treasury acquired the securities in 2008 and 2009 to free up bank balance sheets as the market for agency-guaranteed MBS froze in the heat of the financial crisis. Congress approved the buyback of the securities through the Housing and Economic Recovery Act of 2008. "The market for agency-guaranteed MBS has notably improved since the time Treasury purchased these securities in 2008 and 2009. Based on current market prices, Treasury expects to make a profit for taxpayers on this investment," the agency said Monday. Three years ago, the Treasury assigned the management of the MBS portfolio to State Street Global Advisors (STT). The same firm will manage the winding down of the portfolio. The move is part of the Treasury's ongoing plan to distance itself from investments made in 2008 and 2009 to loosen the liquidity at financial firms during the financial crisis. The Treasury already sold its final share of Citigroup (C) common stock acquired through the Troubled Asset Relief Program. On that sale, the Treasury pulled in a $12 billion profit for taxpayers. The administration also recovered $9.6 billion in TARP repayments through the sale of Ally Financial trust preferred securities and through American International Group's (AIG) recent decision to sell its stake in MetLife (MET) to help pay back the government. Write to Kerri Panchuk.