The New York Fed yesterday revealed some details of its Maiden Lane holdings – funds that were set up to assume some of the crappy assets that weighed down Bear Stearns and AIG. And when you take a close look through the more than 150 pages of holdings, you see that the taxpayer is really sitting on a bum portfolio of securities, ranging from commercial real estate loans to bad residential mortgage securities to collateralized debt obligations.
But one eye opener for this blogger – it looks like among the Bear Stearns securities the Fed (and therefore you and I) assumed were credit default swaps. And swaps that were connected to mortgage insurers. Is it possible that on one hand Bear Stearns was putting together packages of bum mortgage securities it was selling to investors while at the same time betting that the insurers who were backing these and similar securities were going to run into trouble (which of course they did)? At a minimum, it all looks very odd.
To see the Fed report, click here and then go to the bottom of the Fed press release to access the three PDF files on the Maiden Lane holdings. The first PDF details the Bear Stearns holdings.