Federal Reserve Conflicted Over Its Mortgage Intervention Program

The Federal Reserve has a program in place to buy $1.25 trillion worth of mortgage-backed securities to keep mortgage interest rates low and revive the housing market.

This program has been credited with keeping the housing market steady over the past six months.

Some Federal Reserve officials don't like this massive government intervention. They want to let the housing market reach its natural level.

The Washington Post says:

Minutes of the Fed's closed-door meeting on Dec. 15-16 revealed that a "few members" thought that the Fed's $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac might need to be expanded and extended beyond its current end date of March 31. Such an additional dose of stimulus would be especially needed if the economic recovery were to weaken, they argued.

However, one member thought the program could be "scaled back" given the improvement in economic and financial conditions.

The debate over the future of the program comes amid uncertainties about the vigor of the budding economic recovery.

At the December meeting, Fed policymakers decided not to make any changes to the program. At their September meeting, they opted to slow the pace of the purchases, wrapping them up by the end of March, rather than the end of 2009.