Fed Sells $1.3 Billion Out Of $39.3 Billion In Maiden Lane II Assets In Auction

Tyler Durden's picture

The Fed has just announced that of the 52 Maiden Lane II CUSIPs offered as part of a Bid List circulated on April 4, the Fed has just sold 42 of these CUSIPs, for a total face value (not price paid) of $1.3 billion. The actual cash exchanged is likely about 50% of this amount, as the Fed has kept the OID it used when purchasing the full $39.3 billion back in October 31, 2008 for $20.5 billion pretty much flat. The list of auction winner(s) will be made available shortly, as will the actual amount of proceeds received by the Fed and the IRR on the transaction. Since there is another $38 billion in ML2 assets left, look for many more such Bid Lists over the next several months until the market crashes and yield chasing finally ends.

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baby_BLYTHE's picture

It sure is comforting to have a feller who claims to be an expert on the Great Depression behind America's balance sheet.

He's got the whole world in his hands.

Milton Waddams's picture

Isn't it curious that the foremost expert on the Great Depression, Bernanke's claim to fame as well as his theories into appropriate monetary policy at the zero bound, was appointed Chairman of the Federal Reserve in Februray of 2006, just about a year or so before the worst recession since the Great Depression?  Timing is everything.

baby_BLYTHE's picture

It is also important to remember that he voted in lock-step on every policy decision of the Greenspan FED which makes his actions totally unforgiving

Rick64's picture

Hank Paulson had good timing too being appointed Secretary of Treasury in July 2006. So he could help his buddies at GS and avoid all those taxes.  Its almost like it was orchestrated. Hmm

DoChenRollingBearing's picture

I hope they also announce the prices they got for their "assets".

asteroids's picture

Why sell now Ben? Need the cash?

tiger7905's picture

Maybe Ben should create a new mandate for the Fed - "credibility" so that he has a chance of selling off the assets.


oogs66's picture

They will disclose the prices on this but not on Pomo's? Seems bizarre

slaughterer's picture

Is this auction program planned to be ongoing till all ML2 assets are sold off?  Fed shrinking its book!  Gross on the other side?

Traianus Augustus's picture

Don't you know...the only way any of this shit gets bought is if the Fed is on both sides of the sale! 

tek77blu's picture

Bob Chapman interview on gold, silver, and the Fed basically going bankrupt: http://www.youtube.com/watch?v=uDkT8_4tnis

NOTW777's picture

LOL look at the explanation

nothing should be "confused" with actual value - whats that

Misean's picture

Given the broad based economic recovery we are in the Feral ought to post a tidy profit on this stuff, to show all the doomers out there that the mark to unicorn model is untrue, no?

99er's picture

/ES and /ZB

Is the bond market pricing in a government shutdown?



cosmictrainwreck's picture

any and all news is bullish... matters not the nature of it

Milton Waddams's picture

So this is essentially a POMO, right?  But one that extracts liquidity from the system opposed to adding it.

Misean's picture

No, it's a nervous Bernutty testing the waters to see if the shit on the Feral's balance sheet can suck up liquidity and end inflation in 15 minutes.

Greater Fool's picture

Eh? This is the Fed proving that the secondary market for the crappiest of the crap is still, deservedly in most cases, nonexistent. Everybody please resume running your cash CDO model through Intex and shipping the results off to your regulators. Thank you.

Comparisons to POMO are wrongheaded. This is $1.3b: Ben loses that between the seat cushions of the helicopter on POMO days.

tahoebumsmith's picture

The list of auction winner(s) will be made available shortly... Here let me take a guess. Since JP Morgan bought Bear Stearns I would have to guess that they hit up the discount window and bought these back from the FED with free money from the FED === PONZI. Or maybe AIG borrowed some money from Goldman which they got from the discount window at the FED as well and purchased back some of the toxic crap from the FED== PONZI. You see now that the FEDS balance sheet has imploded they will just create another circle jerk to pass the hot potato around and hoodwink the masses into believing they are actually selling something.

topcallingtroll's picture

Yep i knew there had to be a trick. Sell something to the banks and loan them 0.5 percent money to buy it.


tahoebumsmith's picture

Yep and the new game at the Casino will be called flip that Maiden Lane II CUSIPs seeing how the flip that bond table has become such a great success.

indio007's picture

Can you please explain this statement?


 the Fed has kept the OID it used when purchasing the full $39.3 billion back in October 31, 2008


I know what OID is I just don't understand how it applies to the FED. They didn't originally issue these securities.....

indio007's picture

Phew ... I thought you were serious... then again nothing the FED does shocks anymore especiallh when it comes to flipping the script.

topcallingtroll's picture

So are they selling these at a profit? Or is this another not so hidden subsidy like the deals being done at fnma?

Seasmoke's picture

is this the best of the worst shit ?

Ned Zeppelin's picture

Let's be serious.  These securities were sold at a loss.  And I agree with the poster above that it would not surprise me if 0.25% money were used to buy these.  They've got a lot more where these came from, and I figure they're interested in getting rid of them while they can.  The MSFinancialMedia types were heralding this as a great thing, instead of the NYFed taking a bath on the deal.  But, don't worry, their loss is the gain of those who sold them to ML. 



cat2's picture

Why doesn't the every day joe get to bid on fire sale mortgages and such.  It's just not right that banks get to constantly screw the taxpayer...  over... and over... and over...

Yits and the Yimrum's picture

these are not milking "Maidens" we're talking about here>>>>

<<<<these are bilking maidens

ThirdCoastSurfer's picture

Quick math shows the average buy was about $32 million and the 10 rejected were for an average of just $17 million. About half.  For RMBS at $170k a house (about the national average) = just 100 mortgages per CUSIP.   

52 = 1.497

42 = 1.327


The Axe's picture

Don't worry    just like TARP..you will see the BEST assets for sale first!!  By NO means will see the RED ROOF INN...(which taxpayers own) for sale..ha ha..Maiden Lane I and II have more bad assets then any motherfucker could guess at!!

JimBobOMG's picture

Are CUSIPs loses of investors turned into securities or something? I'm noob.

oh, and where do you find the bid info?

tomster0126's picture

 Bernutty...lol.  The bastards are struggling so badly and it's completely transparent.