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Bernanke’s Hester Street home

The Federal Reserve may not want to crow about the half-empty giant shopping mall it now owns in Oklahoma City by virture of its hastily-arranged rescue of Bear Stearns. But at least one other commercial real estate deal that the Fed picked up from Bear appears to be in better shape.

One loan now in the Fed’s portfolio is a mortgage Bear made to the developer of an upscale condominium building in lower Manhattan called The Machinery Exchange. The 14-unit complex at the corner of Hester and Baxter streets is located on the edge of Chinatown and got a favorable write-up from The New York Times in 2007 because of its architectural style.

The developers bought the 94-year-old seven-story former machine warehouse in 2005 for $10 million. Real estate records indicate that Bear provided the financing for that deal. The developers also raised an additional $25 million in construction financing from other investors–although it’s not clear if Bear was part of that transaction.

Either way, it appears the project, where some units were priced at between $1 million and $5 million, is in fairly good shape. The website for renovated building says no units are availalble–usually a sign that all of the apartments were sold.

Fed knows transparency when it sees it

From the start of the financial crisis, the Federal Reserve has fought to keep secret the many measures it has taken to prop-up the banking system.

The Fed has opposed releasing information about the trillions of dollars in loans it made during the crisis or the tens of billions of dollars in troubled assets it has taken on its balance sheet. For instance, the Fed still won’t say just what it acquired, when it took on some $29 billion in troubled assets from Bear Stearns last year.

Time to junk AIG

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The federal government’s $180 billion effort to prop up American International Group has worked, averting an even bigger financial catastrophe. Now it’s time for the Obama administration to oversee the dismantling of the failed insurance giant with all due speed.

A report this week from the Government Accountability Office makes clear that AIG would crumble and likely reignite financial fears around the world without the government’s massive support.

UBS’ days of wine and CDOs

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Expensive wines and toxic assets are rarely mentioned in the same breath.

But that was the talk at UBS during the summer of 2007, when the Swiss banking giant sold some $35 million in soon-to-be rotten collateralized debt obligations to Pursuit Partners, a Connecticut hedge fund, which is now suing the bank.

Last week, a Connecticut judge ruled that Pursuit had presented sufficient evidence that UBS sold the CDOs even though the bank had confidential information that Moody’s Investors Service was planning to slash its credit ratings on those subprime-backed securities.

Cioffi: My investors? What investors?

Ralph Cioffi, the indicted former Bear Stearns hedge fund manager, is trying again to get an insider trading charge dismissed in advance of his upcoming criminal trial. 

And this time his lawyer’s have come up with an interesting legal argument, which essentially is that a “hedge fund manager owes no fiduciary duty to its investors.” Rather, a hedge fund manager’s “fiduciary duty runs only to the hedge fund itself.”

Ralph Cioffi faces the music

We’re just three months away from the criminal trial of former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin and federal prosecutors have just produced a witness list.

Sadly, there are no big marquee names on the list of 32 people, who are scheduled to take the stand and raise their right hands in a Brooklyn, NY federal courtroom. If you were expecting to hear from former Bear CEO James Cayne, don’t adjust your work schedule to take time off.  Warren Spector, Bear’s former president, who Cayne fired a few weeks after the Bear funds collapsed in the summer of 2007, also doesn’t make the grade.

Leaving a house of cards with a good hand

Wall Street’s gatekeepers often make their displeasure known when reporters and columnists refer to investment decisions as “bets” or taking on risk as a “gamble,” and God forbid should you liken the entire business to a “casino.”

And yet are the skills really so different?

A case in point is Steve Begleiter, who is currently having a better run of luck at the World Series of Poker in Las Vegas than he did more than a year ago as head of corporate strategy at Bear Stearns. He is one of 27 remaining players on the final three tables, in third place with $11.9 million in chips.  Play resumes today to winnow the field down to 9.

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