US banks The Federal Reserve on Thursday said it had suffered a $2.7bn paper loss on the $29bn portfolio of toxic assets it took over from Bear Stearns in March as part of JPMorgan Chase’s government-brokered takeover of the stricken investment bank.
News of the unrealised losses, revealed in a filing that also showed that American Insurance Group has already used up three-quarters of a $123bn Fed loan, could fuel the political and public backlash over the use of government funds to rescue financial institutions.
