The Federal Reserve’s Balance Sheet Has Quietly Ballooned To Near Record Highs

Posted By on December 30, 2009

From Ian Mathias The 5-Minute Forecast

“One good reason to guard your finances in 2010: The Federal Reserve’s balance sheet has quietly ballooned back to near-record highs. The Fed announced yesterday that it’s balance sheet expanded to $2.22 trillion last week, it’s grossest level in nearly a year and just a hair from an all time high. Hmmm… if Mr. Bernanke assures us the recession is ‘very likely over,’ then why is the Fed balance sheet in crisis mode?  What are they worried about?  Here’s the answer:

Fed Balance Sheet

“The Federal Reserve went from a non-existent player in the mortgage backed security market a year ago to owning $904 billion of the stuff today.  The ‘private’ bank has clearly moved its aim from the financial sector to housing, loading up on MBS, debt spilling out of Fannie Mae and Freddie Mac and Treasury bonds (a handy way to suppress mortgage rates).

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