Despite the Federal Reserve taking a write down of more than 10 per cent the value of the Bear Stearns portfolio it inherited as collateral for the loans used by JP Morgan to acquire the failed investment bank, the securities are performing very well, according to the Black Rock asset manager hired to oversee the portfolio.
BlackRock President Robert Kapito told a bunch of folks gathered for some kind of Reuters finance confab that “the cash flows are coming in very close to what we had anticipated from the very beginning.”
His remarks are sure to feed into the arguments of those who want to abolish or reform mark to market accounting rules. Kapito himself makes the connection. “I would say that the cash flows on these securities predict a higher value than what is currently marked to market,” Kapito said.
Of course, the market discounts for the future while Kapito’s remarks apply only to past performance. But we’re sure past performance of the Bear portfolio is totally indicative of future results.
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