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Treasury Department to begin selling off mortgage-backed securities it bought during the financial crisis

March 21, 2011 |  8:10 am

Treasury department The Treasury Department is to begin selling off the $142 billion in mortgage-backed securities it purchased from Fannie Mae, Freddie Mac and other government agencies to help stabilize the housing market during the financial crisis.

The divestiture will begin with the sale of $10 billion in so-called agency-backed securities this month, department officials announced Monday. The sales are possible because the market for those securities has improved in the last two years. Based on current prices, the Treasury Department expects to make a profit on the sales.

"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,” said Mary J. Miller, assistant Treasury secretary for financial markets. "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."

Congress in 2008 gave the Treasury Department the authority to buy mortgage-backed securities that had government backing. The move was designed to keep credit flowing in the housing market during the financial crisis. 

The department hired State Street Global Advisors to buy the securities and manage the portfolio. The company now will handle the sale of the securities. The department said it would post monthly updates on the sales on its website.

-- Jim Puzzanghera


Treasury Q&A on the securities sales

Photo: The Treasury Department in Washington. Credit: AFP/Getty Images