U.S. Federal Reserve is holding sizable paper losses on real estate assets acquired in the Bear Stearns rescue

Image via Wikipedia

LONDON (MarketWatch) -- The U.S. Federal Reserve is holding sizable paper losses on real estate assets acquired in the Bear Stearns rescue, the Financial Times reported Tuesday. The assets are held in a vehicle known as Maiden Lane I, which was set up to facilitate JPMorgan Chase's /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 39.28, +0.20, +0.51%) purchase of Bear in March 2008, the newspaper said. The assets were originally valued at $30 billion when a final agreement on the portfolio was reached in June 2008 by the New York Fed and its advisers, the newspaper said. At the end of 2009, the Fed said the assets were worth $27.1 billion. The report said Maiden Lane's losses were concentrated in commercial real estate assets, which had a face value of $8.4 billion and an estimated worth of $7.7 billion when acquired by Fed. They were marked down to $4 billion as of September, according to the report.MarketWatch

US Economics Updating Our Themes: Fed Exit and Sustainable Growth

Image via Wikipedia

Fed will exit in 2010 – What’s New: Fed Chairman Ben Bernanke’s congressional testimony reinforced the notion that progress towards an eventual Fed exit is underway. We continue to believe that the exit process will unfold fairly quickly during 2H10, spurred by market-based indications of rising inflation expectations as the economic recovery takes hold. The Fed is getting closer to hiking the discount rate as part of ending its liquidity facilities. The stance of policy might be best communicated using the IOR (interest on reserves) rate rather than the fed funds target – at least during the initial stage of the exit process.

Sustainable Growth through 2011 – What's new: The jobless claims report released on Thursday, February 11, showed that filings plunged 43,000 in the latest week to 440,000, the lowest reading since the week ended January 2. The latest claims data, layoff survey info, rising temporary help jobs, and consumer sentiment gauges are all supportive of gradual progress toward recovery in the labor market.
LINK TO FULL REPORT HERE