Why You Should Completely Ignore Any Discussion Of Whether The Fed Will Still Buy MBS

[AllentownJake]

There's been a lot of discussion lately (and on CNBC this morning) about whether the Fed really will discontinue its purchases of mortgage-backed securities (MBS).

No doubt the issue will come up today and tomorrow while Chairman Bernanke is on the hill.

But you should completely ignore this debate.

Remember that in December Obama announced a complete blank-check bailout of Fannie Mae and Freddie Mac, a move that enables them to snap up any quality MBS in any quantities.

When the Fed stops buying mortgage-backed securities, Fannie and Freddie can easily pick up the slack. There's no chance MBS will go unbought, the only question is who will be buying them, and we're not even sure (seeing as both the Fed and the GSEs are organs of the government) that that's an interesting question.

http://www.businessinsider.com/why-you-should-completely-ignore-any-discussion-of-whether-the-fed-will-still-buy-mortgage-backed-securities-2010-2


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Propaganda shell game. Reminds me of the TARP shell game, people bitched about TARP, the government gave the Too Big to Fail tax breaks, TARP was paid back, and some people on here defended it because they can't understand a simple ledger entry.