Fed Finally Reveals Some Toxic Bear Stearns Related Garbage On Its Balance Sheet

.1 billion, or 39 cents on the dollar, according to the Fed’s weekly balance sheet. A similar calculation for the Bear Stearns portfolio couldn’t be made because of outstanding derivatives trades.

“The Federal Reserve recognizes the importance of transparency to its financial stability efforts and will continue to review disclosure practices with the goal of making additional information publicly available when possible,” the New York Fed said in yesterday’s statement. Bloomberg filed freedom of information lawsuits against the Fed in April and November of 2008. The Fed fought Bloomberg every step of the way. Sanity prevailed in court.

With this disclosure, everyone should now be able to clearly see what many of us knew all along: The Fed was not seeking to protect weak banks as it alleged, but rather to protect itself from having to disclose billions of dollars of pure garbage on its balance sheet.

On Maiden Lane II the Fed is $19.5 billion in the hole, and on Maiden Lane III the Fed is $33.9 billion in the hole. Clearly the first operation was such a rousing success the Fed needed to do repeat performance, only bigger. Thornburg, Countrywide, Hilton, MBIA, and Ambac are all in the mix.

Now, after nearly two years of delays, the New York Fed has the gall to issue the statement ““The Federal Reserve recognizes the importance of transparency…”

If Bernanke and Geithner were Pinocchio, their noses would be a mile long.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.