Fed Shows $2.7B Loss On Bear Assets

The U.S. Federal Reserve is showing a $2.7 billon paper loss on the $29 billion portfolio of bad assets it received from Bear Stearns as part of JPMorgan Chase’s takeover of the investment bank. The Financial Times says this “could fuel the political and public backlash over the use of government funds to rescue financial institutions.” The Fed won’t realize the losses until it sells the assets, which it has said it won’t do for at least two years. But its valuation of the Bear assets gives a measure of the current market value of troubled mortgage-backed securities.

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