Fed values Bear Stearns assets at a level where it has only cost them $100,000nothing—so far. (Indeed, there’s a $50,000 “buffer” left.)

Strangely, the scuttlebutt in the market yesterday was that the valuation should be around $24 billion. Or at least that’s how I read this paragraph:

If the portfolio’s value were to drop to below about $24 billion, that could indicate mortgage-backed securities have fared even worse in the second quarter than markets have already reflected, analysts said.

So the Fed thinks the market for those securities is about 23% higher than market professionals were telling Reuters it was yesterday.

If I were a Fed policymaker, and I hadn’t been worying about the TSLF before, I would be now.

via CR