WASHINGTON (Sputnik) — The US Federal Reserve is planning to reduce the size of its balance sheet by selling off mortgage-backed securities that it purchased to rescue the US economy during the 2008 financial crisis, Federal Reserve Chairwoman Janet Yellen said.
"At the present time, we hold a large quantity of mortgage-backed securities," Yellen said on Thursday evening. "Eventually we would like to get back to an all [US] Treasury [securities] portfolio."
Yellen made her comments at the International House in New York, where she was joined by former Federal Reserve Chairmen Ben Bernanke, Alan Greenspan and Paul Volcker.
Beginning in 2008, a flood of mortgage foreclosures had made the securities — then held by large US banks and brokerages — essentially worthless.
To rescue the US economy, the Federal Reserve expanded the US money supply and used dollars it had created to buy up the securities from large banks and brokerages such as Citigroup and Goldman Sachs.
The purchase, which when combined with a taxpayer funded bailout exceeding $1 trillion, prevented the complete collapse of the US and global financial system.