A few months back I wrote an article questioning what exactly the Federal Reserve was purchasing with 1.25 Trillion dollars worth of tax payers money that the FED didn’t have nor it has been argued was even legal for the Fed to do. But that is another matter. I questioned whether the Federal Reserve was over paying for assets that had clearly depreciated in value. Why else would a bank, bond holder, hedge fund or Government sell an asset unless they were getting a good deal? After all, these are Toxic assets. I made an assumption that since the housing market had lost 30-40 percent of its value that it was conceivable that the 1.25 Trillion dollars worth of garbage on the Feds balance sheet that they purchased at par value (100%) was probably worth a lot less. One thing I did not include was the commercial real estate properties that the government probably has on its balance sheet (Like the foreclosed shopping mall in the above photo they purchased when they helped JP Morgan Chase buy Bear Stearns.)
Well the Financial Times has just released and article that gives us a peek inside the lies from the Federal Reserve, Treasury and Jamie Dimon, the head of JP Morgan Chase.
Here are some snippets from the article:
“The Fed holds these and other real estate assets in a vehicle known as Maiden Lane I, which was set up to pave the way for JPMorgan Chase’s purchase of Bear.”
“The assets in Maiden Lane I – all of which came from Bear’s mortgage desk – were originally valued at $30bn when a final agreement on the portfolio was reached in June 2008 by the New York Fed, its advisers at asset managers BlackRock and JPMorgan. At the end of 2009 the Fed said the assets were worth $27.1bn (€20bn, £17.4bn).”
“Maiden Lane I was funded with $28.8bn from the New York Fed and $1.15bn from JPMorgan, which agreed to absorb the first $1bn of any losses.”
“As of September they had been marked down to $4bn, filings show.”
You got that? The Fed has assets worth 4 Billion dollars right now that they paid 28.8 Billion for! That is a huge loss of more than 86%. Although this is one example of the assets the Fed has purchased and it is possible that not all of the securities the Fed have purchased has lost this much it is possible that the Fed has spent 1.25 Trillion dollars on assets that are currently valued at 50-85% less than what was paid for them. That could equate to a loss of 500-800 billion dollars.
And Today Barak Obama says he saved America from a Depression. Bullocks! He has only transferred the losses of private banker buddies onto the back of the taxpayers. Once the 2010 elections are over taxes are going to explode higher to pay for all of this and contrary to what this moron says, America is in big, big trouble.
