Fed Purchase of Mortgage Backed Securities
In a pre-announced change of course, the Federal Reserve Bank of New York has begun the process of purchasing $500 billion in mortgage-backed securities in large part guaranteed by Fannie Mae and Freddie Mac. Unlike the original plan to purchased troubled securities, these securities are low-risk investment grade. They are not the mortgage-backed securities partially causing the current credit collapse. For a more detailed story, check out this article by Stephen Bernard: www.builderonline.com/mortgages-and-banking/ny-fed-begins-purchasing-mortgage-securities.aspx.
This is great, but what does it mean to Des Moines, Des Moines Attorneys and Des Moines real estate in general. The truth is - nothing. I'm anxious to hear the justification. At least some of the money is being spent on investment grade purchases, but is this the purpose of providing these funds for public use? It smacks to me of some sort of trickle-down theory that has been proven not to work - unless your Sean Hannity or Rush Limbaugh. Fannie Mae and Freddie Mac assumably didn't need help with the guarantees of quality investments. It was the guarantee of troubled mortgages that allegedly caused the problems. Or maybe not. I can't make heads nor tails of this stuff most of the time, but I know its not working in my home town.
We have yet to see these types of federal investments assist local banks, developers, entrepreneurs or consumers. If these moves really loosen lending, then what is the reason for continued tightened lending? Let's incentivize local lenders and national banks to lend locally, especially in real estate. I know Des Moines real estate entrepreneurs and this Des Moines real estate attorney would welcome it readily.
I'd enjoy knowing your thoughts.
