• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Dear Valued Client: Goldman Is Trying Desperately To "Re-package" Those MBS for You

CrownThomas's picture


And so we've come full circle. The WSJ is reporting that the Federal Reserve Bank of New York will be seeking bids by the middle of this week for roughly $6 Billion dollars worth of residential mortgage backed securities currently held in Maiden Lane II. This would be on the heels of a $7 Billion dollar sale on January 19th to Credit Suisse.

What's notable here is that the Fed said the January sale was prompted by an unsolicited bid from Goldman Sachs (as ZH discusses http://www.zerohedge.com/news/fed-back-its-secretive-ways-sells-7-billion-maiden-lane-assets-directly-credit-suisse-without-p), and now Bloomberg is reporting that there was yet another unsolicited bid. Goldman, is that you, seeking to maximize bonuses shareholder value by buying paper for cents on the dollar?

When the Fed bailed out AIG they purchased the "very risky" securities for $19.5 Billion dollars. As of the February 2nd H.4.1 release, the Fed claims to have $9.5 Billion left (at "fair" value). Potential losses be damned, the banks are struggling and are in need of some income. 

The list of firms that have been invited to bid are as follows:

  • Barclays
  • Credit Suisse (winner of the January sale)
  • Goldman Sachs
  • Morgan Stanley


And fear not about resale to their clients folks, as we learned from Goldman already: "There are prices in the market that people want to invest in things..."



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Tue, 02/07/2012 - 06:41 | 2133307 Augustus
Augustus's picture

A few months ago the screaming was over a suggestion that the Fed was possibly going to sell the entire book of these securities at a profit, but without open bidding.  Now there seems to be open bidding and there is screaming about the Fed using that process to sell these bonds.  Is the only acceptable avenue open to the Fed the one that requires them to hold this stuff until maturity?  With the big decline in interest rates, and mortgage interest rates, it is certainly possible that there are some gains in this portfolio.

Tue, 02/07/2012 - 05:55 | 2133285 resurger
resurger's picture

Ill buy a house for $5 (And i still think it's expensive)

Tue, 02/07/2012 - 07:09 | 2133330 Gavrikon
Gavrikon's picture

In Dee-troit, for sure.

Tue, 02/07/2012 - 05:06 | 2133243 Nobody For President
Nobody For President's picture

Wonder what the half-life of the toxins in these synthetic MBS securities?  Betcha it is still pretty fatal, 'fair value' or not.

This strikes me as a (very) slow-motion version of the old 'hot potato' game.


I think I will pass - I'm gonna pout because I was not invited to bid...



Tue, 02/07/2012 - 04:06 | 2133204 HD
HD's picture

I'll take a large MBS with a side of Greek CDS...to go please.

Tue, 02/07/2012 - 03:52 | 2133196 working class dog
working class dog's picture

Prosecute accounting control fraud, or let everyone with a mortgage get paid off by the Central Bank.

The tax payers are getting raped by this farse of a fractional reserve system. Scrap the central bank idea,

and permit the scum at the federal reserve to buy treasuries only from the US treasury. What a bunch of scum buckets!!

Tue, 02/07/2012 - 03:37 | 2133174 Divine Wind
Divine Wind's picture

Chutzpah is the quality of audacity, for good or for bad. The Yiddish word derives from the Hebrew word huspa meaning "insolence" or "audacity".



Tue, 02/07/2012 - 03:39 | 2133180 Oliver Jones
Oliver Jones's picture

I always remember "chutzpah" by example:

Boy murders both his parents, then demands leniency because he's an orphan.

Tue, 02/07/2012 - 04:10 | 2133206 AldousHuxley
AldousHuxley's picture

Bad Chutzpah

WW2 killed over 60 million people. Jewish supremacists think the deaths of a few million jews is more important than the deaths of all other human beings.


Good Chutzpah

Professor whose parents were killed by the Nazis during holocaust has the balls to stand his ground while getting called as anti-semetic by brainwashed college jews who are spoiled by their parents.




Grand Chutzpah

Jewish grandmother tells why "Jews" don't want to live in Israel: "They love money. Jews are Crooks"


Tue, 02/07/2012 - 07:37 | 2133347 Bendromeda Strain
Bendromeda Strain's picture

Once again AH saves money by letting his Jew hatred warm him. BTW, "radical" professors don't have balls, another fallacy you warm yourself with. Hell awaits... why don't you beat the rush?

Tue, 02/07/2012 - 16:52 | 2135287 AldousHuxley
AldousHuxley's picture

how can quoting jews of opposing views on zionism and Israeli nazism be called "jew hatred"?

Oh you must be one of those people.....narrow minded brainwashed sheeple, yet arrogantly believe that they are right on everything just because their grandparents served the time.


I have no complaint on holocaust survivors being zionists. They were true victims.



If you love Israel so much and Judaism so much, then go live in Israel and leave America alone. But I know you can't. your greed exceeds your fake Judaism and patriotism for Israel.






Tue, 02/07/2012 - 03:16 | 2133152 non_anon
non_anon's picture

Timberwolf 2

Tue, 02/07/2012 - 02:18 | 2133086 UP4Liberty
UP4Liberty's picture

Wash...rinse...spin..repeat cycle.

Do NOT follow this link or you will be banned from the site!