Fed Says Bear Collateral Includes Loans, "Hedges"
Bloomberg News - April 3, 2008 (New York)
By Jody Shenn

By accepting assets with ratings as low as one step above junk status, the Fed is making it more likely that taxpayers face losses, even if debt values are generally much lower than last year, according to Janet Tavakoli, president of Chicago-based Tavakoli Structured Finance.

``The ratings agencies are behind on updating their ratings on these products, yet this is the collateral that the Fed has accepted,'' she said today. ``Given the history of what's been going on, the prices are likely to be a disappointment.''

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