lol!  If the Fed (or the administrator) gets more than face for this $30 billion in crap, then I will eat my hat. 

Here is the general structure as I understand it:

(Bloomberg)  The assets will be placed in a Delaware corporation set up by the New York Fed. BlackRock Inc. will attempt to sell the assets to pay back the Fed and JPMorgan. The first $1 billion of losses, if any, will be charged to JPMorgan, and the remainder go to the Fed.

From other sources, it appears that the Fed can in theory make money from this from accrued interest, and any possible gains on sale.  The former is clear-cut, and the latter will effectively be deemed "interest" to skirt any ownership issues.  As I see this, it is basically a "non-recourse" loan to JPM, with recourse being to the pool of securities...not JPM after the first $1.0 billion.  I have one unconfirmed source saying these are "10 year loans".  I have no idea what that means yet. 

Blackrock is not going to sell it now, that would be insane.  My understanding is that this is MBS and "related items" (shudder), so when will there be a favorable market?  2011-2012?  Ever?  In the meantime is any / all of this performing as agreed?  If not, it needs to be discounted down from face amount, which likely means a baked-in loss.  What would you pay for a nonperforming loan?  Ya think Bear wrote down the assets before this deal was made?  I bet not!  We know the Fed has no real idea what they bought, as they got an asset manager after this deal was cemented  We do know that JPM passed on holding these...right?  Do you think JPM just randomly picked assets for this pool?  Oh no!  They probably picked the BEST ones for the Fed, because they are on the hook for a whole $1 billion!  lolol...

The Fed is as silly as anyone that bought Bear a few months ago, if they think gain on sale is going to happen.  Yes, let's think about the potential gain!  Let's not remember that we 1) have no idea what we have in this pool, 2) have no idea when the market will be favorable to sell what we have effectively "bought", and 3) the current owner of the company has given us a nominal "first loss" participation after passing on effective direct ownership themselves.  lol...

Put lipstick on that wart-hog and take it out on a date if you want.  But to me it is still 30 billion of crap (rounded up), and the Fed owns it.   

As for the rounding error, the first billion is a nod in the direction of risk sharing, and that is about it. 

I have a deal for you.  I will buy LA for practically nothing.  As for the toxic waste dumps, sewage and pending lawsuits equal to 30 billion, you take that.  Just to be nice, I will take the first billion loss if that becomes a problem for you.  As for the rest of the city, its mine.  

What a deal!  Think of the gains!   

lololol....