tag:blogger.com,1999:blog-3395111825224617694.post2371441049517541342..comments2023-12-18T16:32:44.437-08:00Comments on Caveat Emptor: Positive news on the Fed as lender as last resortH.A. Blackhttp://www.blogger.com/profile/09028988783310116580noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3395111825224617694.post-84681834707071564792012-09-14T12:13:14.274-07:002012-09-14T12:13:14.274-07:00I have tried to understand the fed buying Mortgage...I have tried to understand the fed buying Mortgage Backed Securities but think I'm still confused. The fed buys the MBS from a big bank and owns the mortgages included within it, and all payments on said mortgages get directed through to the fed? or the big bank kinda takes a "second" mortgage on the MBS group and pays back the fed through a set payment schedule? Does the fed buying MBS from a bank remove it from the banks ledger? Who holds the risk of loss when the housing prices collapse and the MBS has a high rate of foreclosure? Please post a "MBS for idiots" explanation bc to simple people like me, the new QE3 of buying 40B a month in MBS(and other things im sure) seems like a possible backdoor bailout of risky MBSs, transferring the loss risk to the fed/govt/tax payer. not to mention the inflation problem if the printed money actually becomes truly in public circulation due to a "recovery". John in Kynoreply@blogger.com