Look at the giant bump in 2008 in Fed assets. Most of that is mortgages.
And then in 2019 an even bigger calamity.
Those massive jumps represent the finantialization of the USA, a massive form of economic shift.
[1] https://wallstreetonparade.com/2022/06/fed-data-shows-a-half...
There are zero mortgages on the Fed’s balance sheet. There has never been a mortgage on its balance sheet. If you think the Fed bought whole mortgages off banks for keepsies, or lost a single cent on its bailouts, you’ve missed something.
“Mortgage-backed obligations held by Federal Reserve Banks…guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae” [1]. Not mortgages. It’s a subtle difference. But a big one, given the top tranches of mortgage-backed securities never faced a solvency (versus a liquidity) problem.
Fed means Federal Reserve. Not the federal government. The Fed and federal government are meaningfully different.
It acts in essentially the same manner as 'Bank of England' or the 'ECB' just structured a bit differently.
The Fed's massive intervention in 2008 was similar to other Central Banks, because it's effectively the same thing i.e. 'governance'.
The Fed's intervention to 'buy mortgages' is not a 'market response' - it's a 'government response'.
The intervention was mostly related to buying mortgages (however they ares structured is secondary) and is de-facto a bailout of Home Owners, who, if they were subject to normal market conditions, would have faced massive foreclosures, and, would have destroyed home prices for everyone else, furthering the calamity.
That the mortgages on the Fed's Balance sheet were not 'the worst' of the assets is a bit of a side show - in 'current market terms' they were all toxic we know that because nobody wanted to buy them, which is why the Fed had to do a 'non market intervention'.
If they were not basically 'garbage' at the time, the Fed would not have had to intervene to buy them.
As a result, the Fed hold's a giant pile of 'mortgages'.
In the way Sudafed is meth. Agency MBS’s never faced solvency questions. Unrated mortgage-backed securities and whole mortgages did. You are argued the Fed bought toxic crap off banks. It didn’t. It bought the cream of the crop, giving banks liquidity with which to address the rest.
The difference between mortgages and agency MBSs is entry-level finance. You don’t need to know it. But you should understand your circles of competence well enough to know not to debate it.
This is not what happened. (The Fed never bought the toxic assets. It bought Treasuries and super-safe nontraditional assets off owners of toxic assets so they had the liquidity to resolve themselves. But the toxic stuff ended up in other places.)