Saturday, May 9, 2009

Will Fed Issue Capital Calls?

The Federal Reserve Bank took assets as collateral for loans. When the value of that collateral falls, does the Fed issue a capital call to borrowers? NYT reported:

"Assets the Fed had taken on from A.I.G. and Bear Stearns have resulted in some losses."

Did the Fed go back to J.P. Morgan (now the owner of Bear Stearns) or A.I.G. for more capital? If not, that's another subsidy.