Tuesday, February 16, 2010

Geithner and JPMorgan CEO Jamie Dimon's Parade of Lies Exposed

Inquiring minds are reading the Financial Times article Fed carries losses from Bear Stearns portfolio http://www.ft.com/cms/s/0/b3898a44-1a62 ... ck_check=1 to spot lies made by Treasury Secretary Tim Geithner (then president of the New York Fed) and Jamie Dimon, current CEO of JPMorgan Chase.

The US Federal Reserve is sitting on significant paper losses on the real estate assets it acquired in the Bear Stearns rescue, with much of the red ink coming from debt used to back some of the most high-profile buy-out deals of the bubble years.

Among the debts weighing on the central bank’s portfolio are those used in financing the acquisitions of Hilton Hotels, which is being restructured, and hotel operator Extended Stay, which is in bankruptcy, people familiar with the matter say.

The Fed holds these and other real estate assets in a vehicle known as Maiden Lane I, which was set up to pave the way for JPMorgan Chase’s purchase of Bear.

The assets in Maiden Lane I – all of which came from Bear’s mortgage desk – were originally valued at $30bn when a final agreement on the portfolio was reached in June 2008 by the New York Fed, its advisers at asset managers BlackRock and JPMorgan.

Conflict of Interest

Please note the above conflict of interest. JPMorgan Chase was advising the Fed on the value of securities it was dumping on the Fed. Geithner had to realize this conflict of interest existed but purposely did nothing about it.

Returning to snips from the article ....

Maiden Lane I was funded with $28.8bn from the New York Fed and $1.15bn from JPMorgan, which agreed to absorb the first $1bn of any losses.

Mr Geithner told Congress in 2008 that the central bank had three “risk mitigantsâ€