Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates

Yahoo! Finance/CNBC ^ | Sept. 13, 2012 | Jeff Cox

[Free ThinkerNY]

The Federal Reserve fulfilled expectations of more stimulus for the faltering economy, taking aim now at driving down mortgage rates.

The Fed said it will buy $40 billion of mortgages per month in an attempt to foster a nascent recovery in the real estate market. The purchases will be open-ended, meaning that they will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve.

There's strong hints that they'll do Treasurys next," Joe LaVorgna, chief economist at Deutsche Bank Advisors, said in a phone interview from London."They're pulling out all the stops to try to get this economy to gain some traction and, most important, to get unemployment down."

Enacting the third leg of quantitative easing will take the Fed's money creation past the $3 trillion level since it began the process in 2008.

"The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the Open Market Committee said in a statement.

[Rational Thought]

Everything’s political these days and this move reads to me as a means to pump up stock markets.

Would look for the Obama campaign in the days ahead to use the high stock market levels as their evidence that Obaama has turned the economy around.

[Shady]

So they will not only send the economy into hyperinflation, they will own all of the real estate! What a plan! Yay.

[mwl8787]

Stock market is not going to save Jug Ears. I would be concerned if this move by the Fed had an immediate impact on unemployment.

No sane person would hire b4 the election, in major part due to Obamacare.

[Irish Eyes]

What will happen to all the credit card debt people owe?

[Varsity Flight]

“The money isn’t coming from us... “

Yet.....

Their counting on Extortion-Care.

[TomasUSMC]

12 months will be like 3 percent of GDP. DAMN.

New Scheme:
Bank originates a mortgage, bank packages mortgage, banks sell conforming mortgage portfolios to Fannie/Freddie, banks sell non-conforming mortgage portfolios to Federal Reserve, Fannie/Freddie sell mortgage portfolios to Federal Reserve.

Besides adding another top layer of complexity, this isn’t going to do much to increase velocity or quantity of money.

WELL SAID

[JerseyHighlander]

Found confirmation on my first take on this from JPMorgan:

Thursday, September 13, 2012

The Fed will buy over half of all new agency MBS

So much for shifting the US mortgage business into the private markets. Going forward the Fed will be a buyer of more than half of all new agency MBS issued. At this point one might as well make the GSEs part of the Fed or give the central bank a mortgage origination capability.

Source: JPMorgan	From http://soberlook.com/2012/09/the-fed-will-buy-over-half-of-all-new.html

[silverleaf]

Mortgages during the Carter regime were 17% - if you could get one. The rates exceeded the usury laws in some states and led to alternate financing- if you could find it

I remember qualifying in spring 1980, just after Reagan’s inauguration, for a new house with a 14% VA mortgage rate (conventional rate was 17%)

Under Reagan, within 3 months later by summer 1980 rate dropped to 11.5% and we were so happy when we went to settlement!

[OldArmy52]

The dollar is busy shrinking while the Fed conterfeits by new funny money at $40billion/month/forever.

Excuse? Destroy the dollar until we have full employment?

What a laugh!

Obaba/Bernanke are just pumping up Wall Street (and screwing Main Street) to help their super rich banker/trader buddies by buying morgage cr*p and giving the mortgage cr*p to the taxpayers to be stuck with.

Another case of sticking the citizens with the 1 percenter’s investment garbage.

Obaba/Bernanke stealing from the non-rich to give to the super rich.

Meanwhile, how does bailing out Obaba’s deficits and the super rich banker buddies with “magic money” help Main Steet?

Help raise raw materials prices, help raise gas&oil costs, help raise prices of retail goods. Help raise food prices.

Help impoverish the little people, while Obabaa and his rich buddies stuff themselves.

[AppyPappy]

Releasing the reserves is going to be tricky when oil is approaching $100 a barrel. Going from $4 to $3.50 isn’t that big a deal.

[newnhdad]

doesn’t have to work, just needs to look like he’s doing something..