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Written by admin on October 6th, 2009

Federal Reserve’s Assets Saw New Increases

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The Federal Reserve has experienced its sixth week of increased balance sheet totals since it purchased housing debt as part of a special program focused on mortgage rate reduction.

According to reports, the central bank’s assets increased $51.9 billion to a total of $2.14 trillion, a 2.5% increase. This marked the highest total since May. Related mortgage-backed securities increased another $59.8 billion to reach $685.1 billion.

The current stimulus program that included doubling the balance sheet for the Federal Reserve has not come to a point where analysts are questioning its continued viability and looking for an appropriate time to discontinue.

Back in August, Chairman Ben Bernanke and others considered the extension of the end-date for the $1.25 trillion agency mortgage-backed securities and the $200 billion housing agency debt purchase programs.

Officials from the Federal Reserve spent the last two years shoring up the economy by increasing loans to banks, offering emergency financing to the American International Group Inc. It also helped expand the credit that would strengthen asset-backed securities and commercial paper markets.

Some of the recent figures put holdings of government bonds at $759.8 billion, an increase of $2.03 billion. The federal agency debt including housing-finance companies like Fannie Mae and Freddie Mac, showed gains of $2.04 billion for a total of $125.2 billion.

The total amount of credit that was extended via the Federal Reserve’s Term Auction Facility (TAF) dropped $16.1 billion to $196 billion. The program was intended to increase the distribution of reserves to commercial banks.

Throughout September, the biweekly TAF auctions were decreased to $75 billion from $100 billion the previous month. It was the third consecutive month drop.

Other figures serve to illuminate the status of the central bank. For example, discount-window lending to commercial banks decreased to $28.2 from $29.5 billion the previous week. Commercial paper carried by the Federal Reserve by a October 2008 program went down in value, dropping $38.5 billion from $41.3 billion back on September 9.

Related posts:

1. Federal Reserve Gets $2.3 Billion In Commercial Mortgage Requests
2. Demand For Fed Money Beginning To Ebb
3. 5-Year TALF Loans Billed As Real Estate Market Aid
4. Another U.S. Debt Purchase In The Works
5. An Additional $13.8 Billion Requested By Freddie Mac After Serious Losses