New York-based J.P. Morgan was selected by the Federal Reserve to serve as custodian for its program to purchase mortgage-backed securities (MBS). The program, which began on Jan. 5, 2009, will purchase up to $500 billion in MBS that are backed by Fannie Mae, Freddie Mac and Ginnie Mae. The goal of the program, which was originally announced on Nov. 25, 2008, is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally.
J.P. Morgan will play the role of custodian as part of a select group that also includes four investment managers—BlackRock Financial Management, Inc., Goldman Sachs Asset Management, Pacific Investment Management Co. (PIMCO), and Wellington Management Co.—to implement the program. The selection criteria were based on each institution's operational capacity, size and overall experience in the MBS market.