Federal Reserve Balance Sheet $2.26 trillion

BLOOMBERG
The Federal Reserve Balance sheet increased $7.35 billion this past week to $2.26 trillion. Helicopter Ben increased its mortgage-backed securities by $6.54 billion and Federal Agency debt by $286 million.

One can only wonder what the mortgage market would look like if someone other than the Federal Reserve was purchasing mortgages in an effort to artificially suppress interest rates.

Yesterday, Ben Bernanke reiterated that he expects the Fed will “ultimately incur no loss” on the Bear Stearns and AIG bailouts ($116 billion is the Federal Reserve portion). Let’s not forget that our Chairman of the Federal Reserve was confident that sub-prime was contained.

Ben Bernanke (5/17/07): “The sub prime mess is grave but largely contained. Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the sub prime sector on the broader housing market will likely be limited”.