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Treasury's holdings of mortgage-backed securities drop below $100 billion as sell-off continues

July 6, 2011 | 10:54 am

The Treasury Department said Wedneday it had recovered about 65% of the $225 billion it spent to purchase mortgage-backed securities to help stabilize the housing market during the financial crisis as the government continues to slowly sell off its holdings.

Officials reiterated they expected to make a profit on the sales of the securities it purchased from Fannie Mae and Freddie Mac in 2008 and 2009. In June, the Treasury sold $10.6 billion in securities and received an additional $2.1 billion in principal and interest payments, bringing the outstanding principal in the department's holdings to $94.5 billion.

So far, the Treasury has recovered $146.9 billion of the $225 billion it spent to buy the securities, according to the department's latest report. That includes $35 billion in sales and $111.9 billion in principal and interest payments.

"These MBS purchases helped stabilize the financial markets and preserve access to mortgage credit during a period of unprecedented market stress," said Mary J. Miller, Treasury's assistant secretary for financial markets.

The mortgage-backed securities market has improved markedly since the Treasury Department purchased the securities, she said. "Based on current market conditions, Treasury expects to make a profit for taxpayers on this investment."

In 2008, Congress gave the Treasury Department the power to buy mortgage-backed securities that had government backing to help keep credit flowing in the housing market. The portfolio was about $142 billion In March when the Treasury announced it slowly would wind down the investments. It began selling about $10 billion worth of securities each month as it tried to minimize the affect of the sales on the mortgage-backed securities market.


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

-- Jim Puzzanghera