Monday, March 24, 2008

Timmy Geithner, SIV Manager!?!?!?!?!?

Things just get curiouser and curiouser. Not only has JP Morgan managed to dig under the sofa cushions and find enough dimes to quadruple its bid for Bear Stearns....but the New York Fed has put its side of the deal (eg, the loans that guarantee some of the shite that Bear owns) into a SIV, of all things, to be managed by Blackrock. Sure, if things go belly up, JPM is on the hook.....for a whole $1 billion. Gee whillikers!

What's next?

Will one be able to effect stock transactions through Fedbroker.com?

Will the Fed start offering consumer loans?

Will one be able to ring up Ben Bernanke and receive, Cramer style, a three word answer to investment queries?

Macro Man has a funny feeling about this one.....

4 comments:

dd said...

No problem as BlackRock's new "Penny Mac" (not to be confused with Freddie Mac) is gonna take those assets off the Fed's hands for cheap. Who needs the Fed when BlackRock is riding to the rescue?

Anonymous said...

This whole transaction was illegal Ben, "W" and Paulson need to be hauled to jail, but Americans in general are pretty damn stupid and as long as stocks go up what the hell. This isn't going to end well over the long term.

vlade said...

Mr.M, I think it was clear JPM would raise. If you set aside 6b for litigation, that to me says that the company is worth to you 6.25bn (0.25 being the original purchase price). The only question is whether (or rather how much of) that 6bn gets to the shareholders and how much goes to the (both party) lawyers.

Anonymous said...

A total shame - I hope BS shareholders will at least have the decency to put up a memorial for their saviour Ben the Bear ...
In earnest, given the 1bn injection into the SIV by JP Morgan the FED is now implicitly applying a haircut of roughly three (!!!) percent to the portfolio from BS as evaluated by - yes - BS (soi-disant marked to market) on the 14th of March. Has anybody seen information - or informed guesses - about what exactly is in the portfolio, and for what it could realistically be sold currently?