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Fed balance sheet grows to record $2.82 trillion

Fed balance sheet grows to record $2.82 trillion (by Greg Robb)

WASHINGTON (MarketWatch) - The Federal Reserve's balance sheet expanded to a record $2.81 trillion in the week ended June 8 from $2.79 trillion in the prior week, the central bank said Thursday. The Fed balance sheet continues to set weekly records as the central bank completes its plan to purchase $600 billion in Treasurys by the end of June. The Fed is buying bonds to try to ease financial conditions and lower long-term interest rates under its plan, dubbed quantitative easing or QE2. Fed officials have begun to discuss how to shrink the bloated balance sheet, according to the minutes of their April meeting. Fed officials eventually want to return to holding only Treasurys and get the balance sheet back to pre-crisis levels, but some Fed officials believe the process could take five years. The Fed's assets and liabilities were only $870 billion in December 2007. The report shows that the Fed's holdings of Treasurys rose to $1.55 trillion from $1.53 trillion in the previous week. The Fed's holdings of mortgage-backed securities remained steady at $917.9 billion. Bank reserves rose slightly to $1.66 trillion from $1.59 trillion in the prior week.