Overnight the Federal Reserve Bank of New York released detailed holdings in its Maiden Lane LLC accounts, the vehicles created to take on assets from the Bear Sterns and American International Group rescues. The portfolio is a mix of distressed securities, such as collateralized debt obligations, government-sponsored enterprise debt, and, of course, real estate loans.
Yes, the New York Fed, as today’s Wall Street Journal points out, now owns loans to a great many pieces of commercial real estate, including many hotels. The Fed has hired professional managers to run these portfolios, but it may do more to directly preserve the shrunken value of those impaired assets.
The Fed can help itself by supporting the hotels that owe it money. For instance, the major annual Federal Reserve Bank research conferences are mostly held in secluded resorts like Cape Cod, Massachusetts, and Jackson Hole, Wyoming. Conveniently enough, the hotel mortgages it holds appear to be spread across the 12 districts of the Federal Reserve System and provide ready substitute locations.
The Boston Fed could toss some business toward the Maiden Lane mortgagee AIM Boston Suites. While the vistas of Jackson Hole are tough to beat, Fed officials are apparently lending money to the Orchard Hotel in Colorado Springs. The Atlanta Fed’s financial markets conference has been held in recent years at Sea Island and Jekyll Island, Georgia. But the Radisson Hotel in Jacksonville could be the venue for future conferences.
Sure, moving the conferences could mean giving up great views and easy access to golf courses, but that’s not really why anyone attends a Fed conference anyway. The Fed will save money, and even make some of it back in New York.