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Friday, March 21, 2008

Central Banks Discuss Buying MBS

by Calculated Risk on 3/21/2008 07:13:00 PM

From the Financial Times: Central banks float rescue ideas

Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis.
Any move to buy mortgage-backed securities would require government involvement because taxpayers would be assuming credit risk.
To understand the economic arugment, see Professor DeLong's Post-Meltdown After-Action Report: The Housing Market, the Tasks of the Fed and the Treasury, and Economists' Reputational Bets (see diagrams about half way down post).