Tuesday, March 24, 2009

Maiden Lane's losses grow

Why else, did the Fed release this joint statement with Treasury yesterday? It started with this headline, and then a bunch of nice sounding platitudes, but ending with the final coup d'Etat!

The Role of the Federal Reserve in Preserving Financial and Monetary Stability Joint Statement by the Department of the Treasury and the Federal Reserve

In the longer term and as its authorities permit, the Treasury will seek to remove from the Federal Reserve's balance sheet, or to liquidate, the so-called Maiden Lane facilities made by the Federal Reserve as part of efforts to stabilize systemically critical financial institutions.

See 1:56 in the above clip.
Treasury is taking these loans, because Bernanke wants to continue to say that the Fed has never lost a penny, and it's pretty hard to to say that you haven't lost a penny, when the collateral, in JPMorgan's Maiden Lane loan has already gone down $5 billion!

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