BSC Question

[yupyup]

Question for you BSC folks:

I was reading up on the Fed's move to assist JP Morgan and one thing is not clear to me. When the Fed trys to get its money back by liquidating the Bear assets. If its worth more than originally estimated the Fed gets the keep the extra after JP Morgan gets their cut. What does the Fed do the the extra funds?

[pedrom727]

First keep in mind that it is highly unlikely they will be able to sell any of the securities that Bear has at a reasonable value, that's the nature of derivatives which have no intrinsic assets and are priced using models for better economic conditions. If they did hold them long enough and prices rebounded sufficiently the money would just go towards covering their various other expenses incurred during sorting out the credit crunch.