If there was any doubt in your mind that the cost of Big Shitpile would be paid by us taxpayers, well …

CNBC’s Steve Liesman reports on a letter from Treasury Secretary Paulson to New York Fed President Tim Geithner. In the letter, Treasury agrees that the Fed can bill Treasury for any losses from the Bear Stearns deal.

And you think there won’t be losses?

Just some more detail from the WSJ: Mortgage Securities Back Fed Loan to Bear Stearns

The securities backing a $29 billion Federal Reserve loan to Bear Stearns Cos. consist primarily of “mortgage-backed securities and related hedge investments,” the Treasury Department said.
…
The Fed has declined to provide any underlying detail so far.

JPMorgan will take the first $1 billion in losses on the $30 billion portfolio, and the U.S. taxpayers will pay for the remaining losses (if any).

If any? Count on it my fellow cynics.

Treasury Agrees to Absorb Any Losses to the Fed from Bear Stearns [Calculated Risk] Treasury: Bear Stearns Collateral Mostly MBS [Calculated Risk]