Fed Discloses $10 Billion Loss From Toxic Loan Dumping
The Fed took on more than $74 billion in subprime mortgages, Alt-A loans, CDO, depreciating commercial leases and other assets after Bear Stearns and AIG collapsed and as we warned at the time...
The Fed said yesterday it had unrealized losses of $9.6 billion on the assets as of Dec. 31.
That's -13%, so far, using the same mark to fantasy modeling the banks and AIG had been using.
“The numbers basically confirm that Treasury is going to have to take some TARP money and reimburse the Fed,” said Chris Whalen, managing director of Institutional Risk Analytics. “It is essentially up to the Treasury to get the Fed out of this.”
The central bank lent $2 trillion to financial institutions and hasn’t disclosed information about most of the collateral backing those loans.
The Fed has refused to name the borrowers, the amounts of loans or the assets banks put up as collateral under most of its programs, arguing that doing so might set off a run by depositors and unsettle shareholders.
For the gory details on the CDO and MBS that comprises this disclosure please see Bloombergs detailed report.
The Fed said yesterday it had unrealized losses of $9.6 billion on the assets as of Dec. 31.
That's -13%, so far, using the same mark to fantasy modeling the banks and AIG had been using.
“The numbers basically confirm that Treasury is going to have to take some TARP money and reimburse the Fed,” said Chris Whalen, managing director of Institutional Risk Analytics. “It is essentially up to the Treasury to get the Fed out of this.”
The central bank lent $2 trillion to financial institutions and hasn’t disclosed information about most of the collateral backing those loans.
The Fed has refused to name the borrowers, the amounts of loans or the assets banks put up as collateral under most of its programs, arguing that doing so might set off a run by depositors and unsettle shareholders.
For the gory details on the CDO and MBS that comprises this disclosure please see Bloombergs detailed report.
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