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Political Economy
Posted at 10:26 AM ET, 03/21/2011

Treasury to begin sell-off of mortgage-backed securities

The Treasury Department announced Monday that soon it will begin to sell its portfolio of $142 billion in agency-guaranteed, mortgage-backed securities that the government bought during the financial crisis.

“We’re continuing to wind down the emergency programs that were put in place in 2008 and 2009 to help restore market stability, and the sale of these securities is consistent with that effort,” Mary J. Miller, assistant secretary for financial markets, said in a statement. “We will exit this investment at a gradual and orderly pace to maximize the recovery of taxpayer dollars and help protect the process of repair of the housing finance market.”

The agency said it plans to sell as much as $10 billion in the securities per month, depending on market conditions.

The Treasury began purchasing the asset-backed securities in 2008 as part of an effort to stabilize a financial system that was becoming increasingly volatile as home prices plunged and banks tightened credit access to home buyers. The government later was forced to rescue a bevy of financial firms using other congressionally approved aid programs, including its primary bank bailout fund, the Troubled Assets Relief Program.

Treasury noted in its release that the market for the agency-backed securities has improved substantially since they were purchased in 2008 and 2009. Officials said they expect to turn a profit for taxpayers. The sales are in line with other recent efforts by Treasury to unwind the government’s unprecedented foray into private industry during the crisis. The agency has been planning to sell its stakes in bailed-out companies, including automaker General Motors and insurance giant American International Group.

By  |  10:26 AM ET, 03/21/2011

 
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