The Fed Needs A TARP Bailout

The Federal Reserve has released fresh information on what assets it took on via the bailout of Bear Stearns and AIG. Not surprisingly, it’s a bunch of toxic sludge — $74 billion worth — and it’s already taken about $9.6 billion worth of losses.

The upshot. The Fed may need a bailout:

Bloomberg: The losses on securities backed by assets such as home loans in Florida and California signal that U.S. taxpayers may be forced to reimburse the central bank through the Troubled Asset Relief Program, according to Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics.

“The numbers basically confirm that Treasury is going to have to take some TARP money and reimburse the Fed,” said Whalen, whose financial-services research company analyses banks for investors. “It is essentially up to the Treasury to get the Fed out of this.”

The central bank lent $2 trillion to financial institutions and hasn’t disclosed information about most of the collateral backing those loans. Read the whole thing >

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