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April 7, 2008

All Business: Fed makes a bet most of us couldn't stomach

  • The market sees mortgage-backed securities as radioactive, but Ben Bernanke doesn't.
    • By RACHEL BECK
    AP Business Writer

    NEW YORK — While the rest of the marketplace sees mortgage-backed securities as radioactive, Ben Bernanke doesn't — at least when the taxpayers' money is at stake.

    That isn't an April Fool's joke. The chairman of the Federal Reserve thinks the Fed's $29 billion loan to facilitate the fire-sale of Bear Stearns isn't at risk because the collateral backing it has a high credit rating. He also said at a congressional hearing that the Fed's financial adviser is “reasonably confident” the central bank will get its money back on those mortgage-assets — and may even profit.


     
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