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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (364332)	4/2/2008 6:33:36 AM
From: MythMan	Respond to of 436258

all I hear on CNBC this morning (across the globe) is that the credit crisis is over. That was easy.

To: Real Man who wrote (364332)	4/2/2008 7:24:42 AM
From: Giordano Bruno	Respond to of 436258

Mortgage Securities Back Fed Loan to Bear Stearns By GREG IP and GREG HITT April 2, 2008; Page C2 The securities backing a $29 billion Federal Reserve loan to Bear Stearns Cos. consist primarily of "mortgage-backed securities and related hedge investments," the Treasury Department said. The disclosure, in a letter to the Senate Finance Committee staff, is the first official comment on the securities behind the controversial loan, made March 16 to facilitate J.P. Morgan Chase & Co.'s takeover of Bear. The Fed made the loan with the Treasury's approval, fearing Bear would otherwise fail, causing a serious disruption in financial markets. Based on the makeup of Bear's balance sheet, outsiders have surmised that the securities consisted of residential and commercial mortgage-backed securities. The Fed has declined to provide any underlying detail so far. It has retained money manager and adviser BlackRock Inc. to manage an independent entity that will hold the securities. The Fed will lend $29 billion to the entity, and J.P. Morgan will lend $1 billion. Under the deal's terms, the Fed will be repaid first from proceeds of the sale or maturity of the securities, and J.P. Morgan will be paid last, so it will bear the first $1 billion of losses. Because any profit or loss would affect the annual surplus the Fed remits to the Treasury from interest on its $800 billion portfolio of securities and loans, either ultimately would be borne by taxpayers. "Treasury is very supportive of this agreement, as well as the merger agreement between J.P. Morgan and Bear Stearns," the Treasury's assistant secretary for legislative affairs, Kevin Fromer, said in a letter to Russ Sullivan and Kolan Davis, the Democratic and Republican staff directors respectively for the Senate Finance Committee. Senate Finance Committee Chairman Max Baucus (D., Mont.) and ranking Republican Charles Grassley of Iowa are pressing for details of the deal. The committee's inquiry is one of several on Capitol Hill. Fed chief Ben Bernanke is expected to be grilled on the Bear Stearns rescue Wednesday by the congressional Joint Economic Committee, which is led by Sen. Charles Schumer (D., N.Y.). Write to Greg Ip at greg.ip@wsj.com and Greg Hitt at greg.hitt@wsj.com