March 31, 2010 / 10:13 PM / 10 years ago

NY Fed reveals its Bear Stearns portfolio

* NY Fed, under pressure, discloses Bear assets

* Portfolio has CDOs, CDS, loans to hotels and a mall

By Matthew Goldstein

NEW YORK, March 31 (Reuters) - Two years after the near collapse of Bear Stearns, the New York Federal Reserve is finally revealing the $30 billion worth of ailing assets it took on as part of a hastily arranged rescue of the investment bank.

The New York Fed on Wednesday released a complete list of all the commercial and residential real assets it assumed from Bear as part of the deal that enabled JPMorgan Chase (JPM.N) to acquire Bear for $10 a share.

The eclectic portfolio includes everything from collateralized debt obligations to loans to dozens of Hilton Hotels and a half-empty mall in Oklahoma City. Also in the portfolio are hundreds of credit default swaps and other derivatives, which Bear apparently had taken out to hedge its exposure to some of the other assets going bad.

The New York Fed lists the notional, or face value, of the portfolio at $74.8 billion, which is some indication of just how distressed the assets were when the New York Fed set-up Maiden Lane in March 2008.

But the notional value can be a bit misleading given the wide range of assets that includes everything from government debt to harder-to-price synthetic CDOs and swaps.

Either way, the assets in the portfolio have continued to decline in value since the New York Fed acquired them. At the end of last year, the New York Fed reported the portfolio’s value at roughly $27 billion.

Until now, the New York Fed had resisted disclosing the contents of the Bear portfolio, which is housed in a special entity called Maiden Lane LLC, on the grounds that it would make it difficult for asset-managers from BlackRock Inc (BLK.N) to manage the portfolio. The listing of assets takes up 131 pages.

The New York Fed tapped BlackRock to not only manage the Bear portfolio, but two other Maiden Lane entities it set-up to manage assets assumed from American International Group (AIG.N).

The about face by the New York Fed comes after U.S. Representative Darrell Issa, Republican of California, had sent a letter to William Dudley, the New York Fed’s president, asking him to disclose the assets.

A spokesman for Issa, the ranking member on the House Committee on Oversight and Government Reform, released a copy of the lawmaker’s March 3 letter to Dudley a few hours before the New York Fed disclosed the newest information about the Maiden Lane portfolio.

Issa issued a statement, in which he said the New York Fed had “taken a step in the right direction” by disclosing the portfolio’s assets.

“Hopefully, their actions today signal a new willingness to cooperate with Congress as we investigate how these bailout deals were structured and what the decision making process entailed,” he added.

Meanwhile, the New York Fed disclosed some new information about the two Maiden Lane portfolios that hold assets it assumed from AIG as part of the federal bailout of the giant insurer.

The new disclosures reveal that both portfolios have deposited cash in a money-market account managed by Goldman Sachs (GS.N). A person familiar with the situation said the decision to use a Goldman money-market fund was made by managers at BlackRock. (Reported by Matthew Goldstein, editing by Leslie Gevirtz)

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