For two days running there have been rumours that the Treasury Department is using the funds allocated to the Troubled Asset Relief Program to buy mortgage backed securities, according to CNBC’s bond trading expert Rick Santelli.
If that’s true, we may now be in the second stage of the economic rescue plan passed into law earlier this fall. So far, and quite unexpectedly, most of the actions taken by the Treasury Department have come under the program to purchase capital in troubled financial firms. It almost seemed as if the Treasury had abandonned its earlier plans to buy mortgage assets.
Of course, this raises a host of questions about what prices and what assets the Treasury is buying. Assuming the rumour it true, it’s surprising that they’d do this in secret given all the criticism the Treasury has received for its lack of transparency.
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