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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, host:

And I'm Melissa Block.

Now, the mystery of Maiden Lane. That's the name the Federal Reserve gave to $75 billion of troubled financial products. It bought those products from Bear Stearns and AIG to save the companies from collapse. But in the nearly two years it's owned the package, the central bank has refused to say what exactly is in it - until last week, when the Fed opened its Maiden Lane books. Chana Joffe-Walt, with our Planet Money team, took a look inside.

CHANA JOFFE-WALT: David Zervos(ph) is one of those guys who writes a report every time the central bank coughs. He's an equity strategist with Jefferies and Company. And usually his reports are pretty technical. Not the report on the Maiden Lane assets. It announced: To say this portfolio is a pile of junk is being unkind to junk.

Dr. DAVID ZERVOS (Head, Global Fixed Income Strategy, Jefferies and Company): It was just unbelievable. However, Wall Street decided to cut up and dice up and slice up all the risk on all these different loans. It's all there. It's disturbing.

JOFFE-WALT: What's all there? Loans to luxury hotels in Malaysia, Hawaii, Trinidad, the Orchard Hotel in Baton Rouge, the Civic Opera House in Chicago. Spring 2008, Bear Stearns was on the brink. JP Morgan was interested in taking over the company but did not want these assets. So the Fed told JP Morgan: OK, you take Bear; we will take the toxic assets.

And in that moment, the Fed went from being a boring, button-up-shirt central bank to a bank that now receives mortgage payments every month from American homeowners, and Hiltons in Hawaii and Malaysia. I talked to Vincent Reinhart, with the American Enterprise Institute, about this.

Now, that's a strange position for the Fed to be in.

Mr. VINCENT REINHART (American Enterprise Institute): And you know what's even stranger? What would happen if one of those entities actually failed, that it stopped making payments? The Federal Reserve could wind up owning a hotel in -an airport or a hotel out, you know, overlooking a golf course.

JOFFE-WALT: As Reinhart says this, I point out that on page 24, it does look like there's one asset that has already failed: Crossroads Mall.

Mr. REINHART: Yeah, it owns it. REO means real estate owned.

JOFFE-WALT: So the Fed owns that mall?

Mr. REINHART: Yeah.

Unidentified Woman: Thank you for calling the Crossroads Mall shopping line. If you know the name of the store you are interested in...

JOFFE-WALT: The Fed's mall has a Chick-fil-A, an AMC theater, and an annoying phone directory. This month, it is some guy's job to sell the mall for the Federal Reserve.

Deeper into the pages of Maiden Lane, there are credit-default swaps. Credit-default swaps are basically a bet on the success of an investment. And the Fed has swaps on the state of California, Nevada. In one case, the Fed is in the unlikely position of betting against a Florida school district - meaning, if the district can't make good on its debt, the Fed makes money.

Mr. REINHART: It's mind-bending, isn't it?

JOFFE-WALT: It is a little mind-bending.

Mr. REINHART: So actually, you should have the image of Chairman Ben Bernanke flying to a speaking engagement. And he can look out the window and look down and say: Boy, I own a piece of that, I own a piece of that, I own a piece of that. And that's the way the Fed's balance sheet is right now.

Mr. WILLIAM DUDLEY (President, New York Federal Reserve): Well, we're not happy about it. You know, these were special circumstances.

JOFFE-WALT: This is not Ben Bernanke, but close - William Dudley. He's president of the New York Federal Reserve Bank. We talked to him yesterday. And imagine you're him. You came into your job thinking: OK, central bank president, invest in one boring thing, U.S. treasuries, not the wildest creations Wall Street ever dreamed up.

Mr. DUDLEY: I did not expect, as president of the New York Federal Reserve, that I'd be having to worry about a mall in Oklahoma City.

(Soundbite of laughter)

JOFFE-WALT: The Fed didn't go into these investments blindly or without reason. Dudley says everyone truly believed that it would be financial Armageddon if they didn't step in. And the Fed's an independent entity. It can do what it wants.

But there are two big reasons this all matters to us. Every week, the Federal Reserve hands over profits to the government. So gambling on toxic assets could mean less for us. Second, to buy up all this junk, the Fed essentially had to create money. Creating money often leads to inflation - bad for you and me. So far, neither of these things has happened. The biggest change has simply been one of identity, a transformation from a boring central bank to more of a regular bank. And actually not just a regular bank, but a pretty risky one.

I'm Chana Joffe-Walt, NPR News.

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