Friday, April 24, 2009
Bloomberg reports that assets from Bear Stearns that wound up at the Federal Reserve are souring fast and the central bank may need some TARP money to cover the losses.
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.That image is not from the article but, rather, the number one result for a Google image search on "toxic assets". Does anyone else find it disturbing that such a warning label exists? It appears to be genuine and may just one more bit of evidence that Devo was correct.
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.