The Federal Reserve Bank of New York has joined a group of bond investors in trying to force Bank of America to repurchase mortgages packaged into billions of dollars in securities. However, that effort might be at odds with the New York Fed's broader mission of ensuring stability in the financial system. "This is an inherent conflict," said Robert Eisenbeis, former research director at the Federal Reserve Bank of Atlanta. "They're transferring the loss from what would have been Bear Stearns through the Fed to the originators of the mortgages. That's an odd chain, and I don't know how you manage that."
Published in Brief: