Fed Denies Report It's Involved in Talks on Buying Mortgages

By Craig Torres

March 22 (Bloomberg) -- A Federal Reserve official denied a newspaper report that the Fed is in talks with foreign central banks about the feasibility of using taxpayer money to buy mortgage-backed securities.

The Financial Times reported today that the discussions among officials at the Fed, the Bank of England and the European Central Bank are part of broader talks about how to ease turmoil in global financial markets. The newspaper didn't say where it got the information.

The Federal Reserve has already taken steps to stabilize the market for mortgage-backed securities and provide liquidity to financial institutions.

On March 7, the Fed's board announced a series of 28-day repurchase agreements expected to total $100 billion in which it would accept mortgage-backed securities as collateral. The Fed March 20 said that it would expand the collateral it accepts in the so-called Term Securities Lending Facility to include commercial property loans and bundled mortgage debt.

``The Federal Reserve is in close consultation with foreign central bank counterparts concerning liquidity conditions in markets,'' the Fed said March 7.

On March 11, the Fed announced a program to swap up to $200 billion of Treasury securities in its portfolio for 28 days in exchange for high-grade mortgage-backed securities issued by federal agencies and private corporations.

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net.

Last Updated: March 22, 2008 12:18 EDT

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