At first glance that seems to be where the NY Fed is. It is responsible for most of the Quantitative Easing (QE) programs. One aspect of QE is the purchase by the Fed of Mortgage Backed Securities (MBS). They have bought a lot, like $1.7 trillion.
Unlike the old days of mortgage financing, MBS are high maintenance products, consisting of pools of mortgages which turn over frequently as houses are sold or re-financed. They require a lot of record-keeping and cash management work. The Fed may have decided that farming out the high maintenance work and reinvesting the cash flow short term is more cost effective than attempting to staff up and develop applications to custody the assets in house.
However, most of the financial institutions that can perform this maintenance work have, over the past few years, been charged with rigging Libor, money laundering, aiding and abetting tax evasion, and defrauding clients. So, the Fed has given the maintenance work on the MBS to JPMorgan, which has probably been the bank with the most charges against it.
The basic question is why the regulator has allowed such a crime-ridden environment to exist among the firms they are supposed to regulate.
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