Quantitative easing, particularly the Federal Reserve’s ongoing effort to buy mortgage-backed securities, has frustrated a number of institutions that are also in the market for such assets. The initiative is driving up prices for MBS at a time when smaller banks have been stockpiling such securities.

Bankers view securities as one of few viable ways to stash cash—and bring in some yield—as loan demand remains elusive. In recent years, banks have been regularly putting mortgage-backed securities on their books.

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