Banks and thrifts saw another drop in their MBS holdings in the first quarter of 2013 despite holding their own against the Federal Reserve’s voracious appetite for agency MBS. A new Inside MBS & ABS analysis of bank and thrift call reports reveals that industry investment in residential MBS fell 1.1 percent during the first quarter of 2013 to $1.562 trillion. That was down 4.4 percent from the record $1.634 trillion of MBS held in portfolio by banks and thrifts at the end of the first quarter of last year. Banks reported...[Includes two data charts]