WASHINGTON, DC-Towards the end of 2008 the Federal Reserve had decided to buy $500 billion in mortgage securities from Freddie Mac and Fannie Mae as there were no takers for these securities. However, by March 2010, the Fed ended up buying $1.1 trillion in securities, making it the largest mortgage investor in the world.
This build up of securities can now affect Fed's functioning in fighting inflation, as selling them would mean draining out money from a faltering economy. For the full story, go to The New York Times.
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