Fed mortgage securities tough to unload

After lending in excess of $1 trillion to American homeowners last year in a largely successful attempt at propping up the flailing U.S. housing market, the country’s central bank is now left with a slew of mortgage securities that will be difficult to get rid of, the New York Times explained. Even as the Fed plans to sell off the securities gradually (hanging onto them could be costly and might make it difficult to fight inflation, but selling them too quickly could hamper the economic recovery) some lawmakers and economists are calling on the bank to take on even more assets. Some Fed officials have cautioned against such a move. In a speech last month, Kevin Warsh, a Fed governor, said expanding the bank’s balance sheet could undermine its credibility, which he called its “most valuable asset.” [NYT]