New York Fed Discloses CDO Holdings Of Maiden Lane Portfolios

Tyler Durden's picture

In a surprising move, the FRBNY has just released the holdings of Maiden Lane I, II and III. Here is what the Fed is saying about this development:

The Federal Reserve Bank of New York today announced that it has
expanded the information that it makes available to the public related
to the Maiden Lane portfolios. The new information includes nearly all
of the holdings of Maiden Lane LLC (ML)—with the exception of
residential whole loans as that would violate individual borrowers’
privacy—and all of the holdings of Maiden Lane II LLC (MLII) and Maiden

The additional information includes the CUSIP number, descriptor,
and the current principal balance or notional amount outstanding for
all of the positions in each of three Maiden Lane portfolios. The Federal Reserve recognizes the importance of transparency to its
financial stability efforts and will continue to review disclosure
practices with the goal of making additional information publicly
available when possible. The release of this information today comes
after reaching agreement on issues of confidentiality with JPMorgan
Chase with respect to the assets of ML and the American International
Group, Inc. (AIG) with respect to ML II and ML III.

As a reminder:

ML was formed to facilitate the merger of The Bear Stearns
Companies, Inc. and JPMorgan Chase. The New York Fed extended credit to
ML to acquire certain assets of Bear Stearns.ML II and ML III were formed to facilitate the restructuring of the
government’s financial support to AIG. The New York Fed extended credit
to ML II to purchase residential mortgage-backed securities from the
securities lending portfolio of several regulated U.S. insurance
subsidiaries of AIG. The New York Fed extended credit to ML III to
purchase multi-sector collateralized debt obligations from certain
counterparties of AIG Financial Products Corp.

Some preliminary observations:

  • ML 1, in addition to holding a boatload of CDOs, has quite a few Residential whole loans, a variety of single names CDS, of which the bulk is CMBX, AMBAC, MBIA, PMI, CDS on Commercial Real Estate, CDS on Munis, CDS on non-agency RMBS, CDS on Non-residential ABS, some treasuries, and just under $3 billion in Interest Rate Swaps.
  • ML 2, as noted, contains $35 billion of Non-Agency MBS. It also contains $280 million in cash, held with a Goldman Sachs account. (GOLDMAN SACHS FIN SQ GOVT FS)
  • ML 3 consists of a variety of CDOs whose notional value is given as $56 billion. Once again, the Fed parks its cash of $383 million in this account with Goldman Sachs.

We will dig through these in detail shortly.

Full listing of assets:

ML 1

ML 2

ML 3

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john_connor's picture

This is just a political stunt so they don't have to comply with a full audit.

monmick's picture

"The Federal Reserve recognizes the importance of transparency to its financial stability efforts and will continue to review disclosure practices with the goal of making additional information publicly available when possible."

carbonmutant's picture

I wonder how much Ron Paul had to do with that recognition...

TheGoodDoctor's picture

I agree it is to appease Ron Paul. So, are these just holding companies then? LLC. No shit.

WmWallace's picture

I knew the Fed was directly buying individual stocks to prop the market up. This was undisclosed to investors and is a violation of Securities law. This is a felony. All those like myself who purchased Puts or short positions when this information and the information that the Bank of England was also secretly funneling... money to prop up the banks was defrauded. Also, all those within the banks that were privy to this info are guilty of insider trading. Ben Bernanke, Paulson and Geithner and the rest of the tribe should all be in jail by morning….

Bank of England tells of secret £62bn loan to save RBS and HBOS

Bank of England advisers not told about secret £62bn loan to HBOS

Bank gave RBS and HBOS 'secret' £62bn loan

Fed Refuses to Disclose Recipients of $2 Trillion

Fed Fights Request To Disclose Who Got $2 Trillion In Bailouts


zenon's picture

Good luck with that! (BTW I'll join in if you get something going)

percolator's picture

I second what zenon said.

deadparrot's picture

There are lots of lawyers looking for work right now. Find one willing to start a class action lawsuit.

velobabe's picture

class action lawsuits are curious beasts.

hey, O/T i am worried about deadhead. haven't seen him since that open sunday forum about where the hell everybody is in this here, today's economy. he exposed himself and haven't seen him since. he cares a lot about the old timer's on this blog.


also where is, I need more cowbell.

these are significant and important avatars, star atars, hotars, bitars.

Ludic Fallacy's picture

Agreed.  Throw the wolves some meat so they don't go after the herd.

Rainman's picture

Interesting timing. On the last day of the quarter and the last day of Fed MBS purchases ( for now ). No conclusion, just suspicion about why they are tipping over these trash cans today.

Harbourcity's picture

On your point, begs the question as to how long can they can use this event to delay providing either new information or an update.


bc0203's picture

Keep your eye on the other hand. The magician is up to something...

Fritz's picture


The other hand is picking the taxpayers pocket in some insidious fashion. 

WmWallace's picture
Traitors who stole $24 Trillion from the American citizens and sponsored spies who infiltrated the Pentagon and sold Secrets to all of the US nuclear weapons to China
InstantWinner's picture

Explains the recent articles questioning why Goldman has so much cash under management.

SayTabserb's picture

Wow, the Fed is even owed money by Hilton Hawaiian Village.  What would Cricket Blake have to say about that?

monmick's picture

I wonder how they price the swaps, in paticular the CDSs and the interest rate swaps?

SayTabserb's picture

A dart board in the Yale Club.

Argos's picture

Best episode ever. Well worth the watch

perchprism's picture

Naw, Scott Tenoman Must Die was the best episode.

Cursive's picture

The Maiden Lane vehicles were unconstitutional in the first place, but my first reaction to reading this was,  "Why would a central bank that sets interest rate policy ever enter into or purchase interest rate swaps?"  Seems kinda like Superman runnin' a book on black market kryptonite.

glenlloyd's picture

I believe they justfified this under the heading of unusual and exigent circumstances, but I could be wrong.

SayTabserb's picture

Under what legal authority is the Fed allowed to acquire non-agency MBS? The 1913 Act might be stretched to cover GSE-backed mortgages on the theory they have (especially since Dec. 24, 2009) the full faith and credit of the Treasury behind them.  But how can they own ordinary mortgages Constitutionally?

monmick's picture

"As part of extending support to specific institutions, under section 13 (3) of the Federal Reserve Act, the Board of Governors of the Federal Reserve System in 2008 authorized the New York Fed to facilitate lending to three limited liability companies—ML, ML II and ML III."

faustian bargain's picture

A frustrating wall of fictional words.

SayTabserb's picture

From the Fed's webpage:What securities are eligible for purchase under the program?

Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers. The program does not include CMOs, REMICs, Trust IOs/Trust POs and other mortgage derivatives or cash equivalents. Eligible assets may be purchased or sold in specified pools, in "to be announced" (TBA) transactions, and in the dollar roll market."

Maybe the Board of Governors decided unilaterally to go outside the Fed's 1913 Charter, but the question remains: is the legal authority there for holding non-Agency MBS?

monmick's picture

What "program" are they referring to?

Section 13 (3) of the Federal Reserve Act, at least the way the Fed interprets it, is pretty broad and open ended. Sort of like the Martial Law of central banking....

InstantWinner's picture

Zero Hedge knew those maiden thingies were stuffed full of shit and boy where they right!  Congrats!

RobotTrader's picture

If the Fed were to take Maiden Lane public, no doubt, it would be 300% oversubcribed and could be the hottest IPO of 2010.

Right now, there is an unprecedented demand for junk, garbage, and/or anything else perceived to be at "rock bottom"...

Too late to buy the bombed out retail stocks, they have already had 300% - 500% runs.

So the speculators will be looking into other garbage bins for bargains.

faustian bargain's picture

I wonder what they had on the books before they were released today? i.e. this is the positive spin; what is the reality? Somebody's arm must be tired from all the erasing.

non-anon's picture

shades of Enron

By law, the Fed isn't allowed to buy assets -- it can only lend, as lender of last resort. That was a problem for the Bear Stearns bailout, because JP Morgan said it would only buy Bear if someone else assumed responsibility for the crap. Fed came up with this idea to start a shadow company, called a special purpose vehicle (SPVs were how Enron operated, creating "Chewco" and the like named after Chewbacca - the New York Fed called their SPV "Maiden Lane LLC" for name of the street the NY Fed is located on in southern Manhattan). The deal then was JP Morgan put $1 billion into Maiden Lane, the Fed put $29 billion in cash into it. Maiden Lane paid Bear Stearns $30 billion, which went straight back to JP Morgan as this deal happened simultaneously to JP's purchase of Bear. So Morgan got $30 billion in cash ($29 billion net) and the Fed got stuck owning the crap, but was legally only making a loan to Maiden Lane, who was the legal owner (Maiden Lane was incorporated not in NYC, but in Delaware to avoid paying taxes). By the Fed's own accounting - which is very different from a real company's accounting - Maiden Lane has lost $5 billion between its creation and today.

faustian bargain's picture

But who owns Maiden Lane LLC? I don't see how the Fed could say they're not buying assets, even if it's through a subsidiary company. It's insane.

Willzyx's picture

Or like how repo 105's are really "sales"

Rainman's picture

Emergency powers can be quite creative, yah ??

GubmitWKR's picture

Im dissapointed that the fed didn't use more appropriate discriptors like EATSHT_07, URFKD_06, RIPOF_06

Stanley Lord's picture

Hey ZH Thank you for letting me in the club.

I will be quiet now.

buzzsaw99's picture

It's official, the usa is a criminal org.

Catullus's picture

Wait wait wait.  Do you hear that?  Turns out the world is not collapsing into a neverending pit of dispair and civil unrest.  So let us just audit the rest of the fed.  It's not going to change what's already been done.  An audit never does.  If it makes you feel any better, we'll wait 6 months before telling everyone what you've done.

vote_libertarian_party's picture

Nice of them to leave off the key info.  Like these assets are worth 50% of a non-performing loan.

hooligan2009's picture the Irish Government took out its problem banks mortgage portfolios at 53 cents in the Euro on this basis the $156bn in ML is worth around 80 bn..hmmm..i guess if you are the Fed with rigged accounting its not a loss of 76 billion at all..GS market cap is 90 billion...just saying..whats the rate on an overnight tri-partite collateralised repo actually worth if the mark to market is like this?

hooligan2009's picture

GMTA vote libertarian...wait..who are you? :)