Treasury Implemented the Mortgage Backed Securities Purchase Program Consistent With Its Authorities, But Needs to Improve Oversight of Financial Agents. Audit Report.

摘要

Section 1117 of the Housing and Economic Recovery Act of 2008 (HERA), authorized the Secretary of the Treasury to purchase obligations and securities issued by the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Home Loan Banks. The Department of the Treasury’s (Treasury) authority to make these purchases ended on December 31, 2009. Section 1117 also authorized Treasury to sell or otherwise exercise any rights received in connection with these purchases, at any time. The Agency Mortgage Backed Securities (MBS) Purchase Program is one of several programs that Treasury established under its HERA authorities. 3 Under the Agency MBS Purchase Program, in response to the financial crisis at the time, Treasury purchased and sold, acting through financial agents, MBS guaranteed by Fannie Mae and Freddie Mac (these securities are commonly referred to as “agency MBS”). In total, before its purchase authority expired, Treasury purchased $225 billion agency MBS , beginning in September 2008 . As market conditions improved, Treasury began selling its agency MBS in March 2011. On March 19, 2012, Treasury reported that it sold its entire agency MBS portfolio, receiving $250 billion for it in total. In July 2012, w e issued an audit report related to Treasury’s selection process of financial agents for this program. In that report, we found that Treasury did not fully document its process for selecting the financial agents to manage its portfolio for the program. This report presents the results of our audit of Treasury’s Agency MBS Purchase Program. As part of our audit, we assessed (1) Treasury’s execution of the Agency MBS Purchase Program and (2) Treasury’s oversight of the financial agents it hired to execute the program on its behalf. To accomplish our objectives, we reviewed relevant laws and regulations, program-related documents provided by Treasury officials, and investment-related documents obtained from the financial agents . We also interviewed Treasury officials and the financial agent.'s senior management and staff. Appendix 1 details our objectives, scope, and methodology; and appendix 2 provides more detailed background information about HERA and the Agency MBS Purchase Program.