Reserve Reveals Bear Stearns Assets it Swallowed
April 1 (Bloomberg) -- After months of litigation and political scrutiny, the Federal Reserve yesterday ended a policy of secrecy over its Bear Stearns Cos. bailout.
In a 4:30 p.m. announcement in a week of congressional recess and religious holidays, the central bank released details of securities bought to aid Bear Stearns’s takeover by JPMorgan Chase & Co. Bloomberg News sued the Fed for that information.
The Fed’s vehicle known as Maiden Lane LLC has securities backed by mortgages from lenders including Washington Mutual Inc. and Countrywide Financial Corp., loans that were made with limited borrower documentation. More than $1 billion of them are backed by “jumbo” mortgages written by Thornburg Mortgage Inc., which now carry the lowest investment-grade rating. Jumbo loans were larger than government-sponsored mortgage buyers such as Fannie Mae could finance -- $417,000 at the time.
“The Fed absorbed that risk on its balance sheet and is now seen to be holding problematic, legacy assets,” said Vincent Reinhart, a resident scholar at the American Enterprise Institute in Washington who was the central bank’s monetary- affairs director from 2001 to 2007. “There is both an impairment to its balance sheet and its reputation.”
The Bear Stearns deal marked a turning point in the financial crisis for the Fed. By putting taxpayers at risk in financing the rescue, the central bank was engaging in fiscal policy, normally the domain of Congress and the U.S. Treasury, said Marvin Goodfriend, a former Richmond Fed policy adviser who is now an economist at Carnegie Mellon University in Pittsburgh.
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earlier:
Census Project Adds to the Job Picture
200,000 new jobs will be announced today, half of those are temporary Census positions. Critics say that's a drop in the bucket.
When March employment figures are released Friday by the Department of Labor, analysts are expecting to see the biggest U.S. job gains in more than two years.
But perhaps half the 200,000 or so positions expected to be added to payrolls may be the byproduct of a government effort that has turned into a fortuitous job generator: the U.S. census.
The constitutionally mandated nationwide head count arrives this year at a crucial time -- after the start of the country's economic recovery, but before private-sector employers have created many jobs. That's a stroke of luck for the Obama administration, which has been criticized for failing to revive the labor market. And it's a windfall for the 700,000 temporary employees the census expects to hire, although most of the jobs will last only two to six weeks.
This year's census isn't just about counting heads, it's helping create jobs in an economy that needs them badly.
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