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Fed is already $5.25 billion in the hole on AIG, Bear Stearns 'investments'

Posted Jun 10th 2009 5:00PM by Zac Bissonnette (RSS feed)
Filed under: Bad News, Amer Intl Group (AIG)

Remember when the United States government took a bunch of your money and bought crap securities from Bear Stearns and American International Group (NYSE: AIG) -- and promised we wouldn't lose money? The securities were temporarily undervalued because of an "illiquid marketplace" and we'd earn handsome returns.

Ah, yeah. About that. The Associated Press reports that "The Federal Reserve lost $5.25 billion in the first quarter on the securities it acquired with last year's bailouts of Bear Stearns and insurer American International Group, according to a report Wednesday. The loss on the holdings, which include mortgage-backed securities, reflected a decline in their value as the recession carried over into the first three months of this year. The cumulative loss on the Bear and AIG holdings comes to $16.46 billion since they were taken over last year."

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