Fed data show losses on Bear Stearns

By Ros Krasny

CHICAGO (Reuters) - The U.S. Federal Reserve lifted the lid on its efforts to shore up the financial system on Thursday, and in the process, showed a $3 billion (2 billion pound) loss on the books from its deal to rescue investment bank Bear Stearns.

The Fed provided more details of the huge increase in its balance sheet that occurred over the final months of 2008, rounding out data already issued on a weekly basis. Bank officials also said more disclosure could be on the way.

Combined assets in the Fed system hit $2.25 trillion as of December 31, 2008, up a sharp $1.33 trillion from a year ago.

The U.S. central bank has enacted an alphabet soup of new programmes to support the credit markets.

Thursday's statements specifically provided a window into the Fed's Commercial Paper Funding Facility, created in October 2008 to provide liquidity to the CP market, and the three "Maiden Lane" limited-liability companies created by the New York Fed as part of broad-ranging rescue efforts.

Much interest was on the original Maiden Lane, which was formed in mid-March 2008 as part of the orchestrated takeover of the failing investment bank Bear Stearns by JPMorgan Chase.

Some $1.7 billion in gains logged by the CPFF were swamped by the $3.1-billion unrealised loss in Maiden Lane, which included $54 million in "professional fees."

Maiden Lane was created to hold an asset portfolio that JPMorgan found too toxic to assume in whole, and analysts said Thursday's report bore out that assessment.