Central banks mull buying mortgages: report

Subject: Central banks mull buying mortgages: report Sat Mar 22, 2008 9:27 pm

NEW YORK (MarketWatch) -- The U.S. Federal Reserve and some of its European counterparts are talking about the practicality of using public money to buy large quantities of mortgage-backed assets to clean up the credit mess jeopardizing global economic growth, the Financial Times reported Saturday.
The discussions are preliminary, with the Bank of England seen as the most anxious to pursue the concept and with the European Central Bank far less eager, the report said without citing sources.
However, the Bank of England was quoted in a later report by the Bloomberg news agency as denying it had plans to pick up mortgage-backed securities, although it is in talks with other central banks on how best to "ease the strains" in the markets.
"We have been examining a number of other options, but it is too early to go into any detail," the Bank of England said in a statement quoted by Bloomberg. "The bank is not among those reported today to be proposing schemes that would require the taxpayer rather than banks to assume the credit risk."
The Fed, which has taken a series of steps in recent weeks to offset the crisis, is reportedly open to the idea, but does not yet view the situation as dire enough to warrant such action, the Financial Times report said.
It also said some analysts believe the Federal Reserve could take further steps to bolster liquidity to the market, while the U.K.'s ability is limited as the country lacks entities equivalent to the U.S. Federal Housing Administration, Fannie Mae and Freddie Mac.
The U.K. government recently stepped into the troubled mortgage market in a big way by nationalizing mortgage-lender Northern Rock.

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Central banks mull buying mortgages: report

Central banks mull buying mortgages: report

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