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

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, 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..."