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Friday, January 9, 2009

Fun Fed Charts: Maiden Lane LLC

Definition:

WMAIDEN1: On June 26, 2008, the Federal Reserve Bank of New York (FRBNY) extended credit to Maiden Lane LLC under the authority of section 13(3) of the Federal Reserve Act. This limited liability company was formed to acquire certain assets of Bear Stearns and to manage those assets through time to maximize repayment of the credit extended and to minimize disruption to financial markets.

Hmmmmm. I recall that EVERYBODY swore up and down that the taxpayer would totally make money on this deal. Well, Maiden Lane LLC started off with $30 billion in “assets” (I use the term loosely) that are now valued at $27. That is $3 billion or a 10% loss in just over 6 months.

7 comments:

Unknown said...

I really can't see any other interpretation than this:

Companies that were unprofitable exhausted the capital and credit markets with their losses. So now their losses are financed unwillingly by the general public.

Jake said...
This comment has been removed by the author.
Jake said...

while i am not stating the taxpayer will end up getting paid back in full (i doubt it), it is (in my opinion) too early to state they definitely won't.

asset prices have sold off since march so it is no surprise they have been marked down.

Anonymous said...

Actually in this market and in that time frame a 10% loss is not that bad.

And BTW if the eventual profit scenario was really believed at the time, then why didn't the Fed throw a lifeline to BSC?

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