Bernake and Paulson have an ugly track record

That are the numbers by 31st Dec since prices in real estate dropped quite a bit since yea rend the losses might be closer to 20 billion. JPM or Goldman can not get away by just repaying TARP money since AIG was by all means bankrupt and could have not paid any outstanding contracts and the same is true for any bonus payments of AIG.
Obama and his administration need to be very clear about this matters but I doubt they will be.I also do not think that the quality of Lehman colleteral could have been worse than those toxic stuff and this argument of Geithner and Bernanke is a blunt lie as they let Lehman go bust deliberately.

Bear Stearns, AIG Dumped $74 Billion in Subprime, CDOs on Fed

April 24 (Bloomberg) — The Federal Reserve took on more than $74 billion in subprime mortgages, depreciating commercial leases and other assets after Bear Stearns Cos. and American International Group Inc. collapsed.

In its biggest disclosure of the securities accepted to stabilize capital markets, the Fed said yesterday it had unrealized losses of $9.6 billion on the assets as of Dec. 31. The bonds, swaps and notes were taken in from Bear Stearns, once the fifth-biggest Wall Street firm by capitalization, and AIG, which had been the world’s largest insurer.

The losses on securities backed by assets such as home loans in Florida and California signal that U.S. taxpayers may be forced to reimburse the central bank through the Troubled Asset Relief Program, according to Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics.


Excerpt 2

Fed’s Bear Losses Dominated by Commercial Real Estate (Update2)

By Scott Lanman

April 23 (Bloomberg) — The Federal Reserve released its most detailed breakdown to date on the types of assets it accepted from Bear Stearns Cos. a year ago and the cause of losses on the portfolio.

The biggest losses in the $25.7 billion portfolio of Bear Stearns assets as of the end of last year came from commercial and residential mortgages, according to a report released by the Fed in Washington today. The central bank agreed in March 2008 to buy the assets so JPMorgan Chase & Co. would acquire Bear Stearns and avert the investment bank’s bankruptcy.

Today’s report follows pressure by lawmakers on the central bank to identify the collateral for its record extension of credit, along with a lawsuit by Bloomberg News in November. Fed Chairman Ben S. Bernanke has pledged to boost disclosure, assigning Vice Chairman Donald Kohn to lead the effort.

The Fed wrote down the value of former Bear Stearns commercial-mortgage holdings by 28 percent to $5.6 billion and residential loans by 38 percent to $937 million as of Dec. 31, the central bank said today. Properties in California and Florida accounted for 45 percent of outstanding principal of the residential mortgages.

“It’s just the tip of the iceberg when it comes to losses in the commercial real estate market,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. Lenders “were over-optimistic about tenant occupancy rates and rents,” he said.

Fed’s Path

The emergency action to prevent the collapse of Bear Stearns started the Fed on an unprecedented path, which has led the central bank to more than double the size of its balance sheet.

Bernanke has overseen an expansion of its efforts to include financing corporate debt, lending to securities dealers and the commitment to buy hundreds of billions of dollars of mortgage securities and Treasuries.

The Fed has declined to identify the collateral it accepts under a number of its programs, prompting lawmakers to call for increased transparency. The Senate voted 96-2 earlier this month to urge greater disclosure by the Fed, including on the collateral taken on in the bailouts of Bear Stearns and American International Group Inc

….

The Fed said its commercial-mortgage loans had principal of $8.5 billion at the end of December, compared with the “fair value” assessment of $5.6 billion, indicating an assumption that about 35 percent of the debt won’t be paid back.

One company, which the Fed didn’t identify, represented 48 percent of the total principal balance of the commercial mortgage loans in the portfolio.

The residential loans had principal of $1.7 billion, compared with the fair-value amount of $937 million, for an anticipated loss of 44 percent.

The Fed issued a $28.8 billion, 10-year loan to a new unit, called Maiden Lane LLC, formed to buy the portfolio. JPMorgan is taking the first loss through a $1.15 billion loan, which would be wiped out by unrealized losses already. Unrealized losses on the Fed’s loan total $3.4 billion, the central bank said.

Bernanke is loosing money on this although he made phony claims like taxpayers may even make money on that going along. He needs to fired for an outrages bad job he made since he entered his office and the outrages story that he made this mobster kind of pressure on Lewis with Paulson shows he is not fit for the job to say the least. One could also claim he is not working for the US taxpayers but rather for the ‘Rothschild boys’ as he has made to many obvious mistakes for such a smart guy.

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~ by behindthematrix on April 24, 2009.

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