U.S. taxpayers may be stuck with losses on $30 billion of Bear Stearns Cos. assets owned by the Federal Reserve even though the central bank has said otherwise, according to Robert A. Eisenbeis, Cumberland Associates Inc.’s chief monetary economist.
See, the Fed had to backstop a lot of Bear's book to make its takeover palatable to JPMorgan. We can expect even more severe losses once the Fed figures out how to track the garbage it has accepted as collateral from insolvent banks. Oh, wait, I'm sorry. It's already tracking that stuff, it just refuses to tell us even after Bloomberg's news service took the Fed to court.
Just wait until the TARP oversight committee starts reporting results! Get your blood pressure medication ready.
Nota bene: Anthony J. Alfidi sold short calls on Bear Stearns last year as it was going down the drain. Gotta take profits when you can.
