Friday, November 21, 2008
Where's the outcry over the $8.6 billion the Fed lost on currency swaps?
There was huge public outcry when the Fed arranged the "bailout" of Bear Stearns. Back in July the Fed created the Maiden Lane Portfolio to assume the $28.8 billion of Bear Stearns' assets. The value of that portfolio as of 11/20 was $26.9 billion. So, over the course of four months the Fed has "lost" about $2 billion based on current, mark-to-market value of the Bear Stearns assets.
Yet in the past week the Fed's foreign currency holdings have lost $8.6 billion in value--more than four times what it lost on the Bear Stearns deal. (View the Fed's weekly statement here.)
At least with Bear Stearns the Fed acted to help an American institution and U.S. financial markets, as opposed to giving money to foreigners.
So, where is the public outcry? Where are the Congressional hearings?