[nicmarlo]

"... on March 13, Bear Stearns advised the Federal Reserve and other government agencies that its liquidity position had significantly deteriorated and that it would have to file for bankruptcy the next day unless alternative sources of funds became available." The Fed chairman said that the central bank was forced to step in...

Treasury Agrees to Absorb any Losses to the Fed from Bear Stearns

Video from CNBC (hat tip idoc)

CNBC's Steve Liesman reports on a letter from Treasury Secretary Paulson to New York Fed President Tim Geithner (PDF). In the letter, Treasury agrees that the Fed can bill Treasury for any losses from the Bear Stearns deal.

[nicmarlo]

http://calculatedrisk.blogspot.com/2008/04/treasury-agrees-to-absorb-any-losses-to.html

[nicmarlo]

You might be interested in this, nully. (My post #52.)

[null and void]

The money quote:

"...and acknowledge that if any losses arise out of the special facility extended by the FRBNY to JPMCB, the loss will be treated by the FRBNY as an expense that may reduce the net earnings transfered by the FRBNY to the Treasury general fund."

Translation: the tax payers will get stuck with the bill.