Remember the Bear Stearns failure, way back in March? A huge portfolio of mortgage assets taken on by the federal government in the wake of the investment bank’s failure has continued to lose value, to the tune of $2.7 billion in the third quarter. The nine percent loss on the $30 billion in mortgage assets ends up leaving the Fed with a book worth $26.8 billion as of Thursday, according to an update provided by the Federal Reserve. The loss leaves U.S. taxpayers on the hook for roughly $2 billion as of now, a number that is likely to grow as the portfolio continues to lose value; taxpayers face the direct risk of further declines after the Fed agreed to take on the Bear Stearns portfolio as part of a deal it orchestrated in March that saw Bear Stearns sold off to JP Morgan Chase & Co. (JPM). The Bear Stearns mortgage assets have declined in value by a little more than $3 billion since March — the vast majority of that decline, by the way, coming in the past few weeks — a number that was roughly equal to a quarter of Bear Stearns’ book value at the end of February. A Reuters story notes that an investor run on the investment bank, which pushed the firm into insolvency, wouldn’t have mattered in the face of such marks; Bear Stearns would have been doomed by such marks even had it survived such a run. “The government is stemming the crisis by socializing companies’ losses,” Steve Persky, chief executive at Dalton Investments told Reuters. (Do you think?) On the $30 billion portfolio, the Federal Reserve extended a $28.8 billion loan after JP Morgan agreed to cover roughly the first $1.2 billion in losses; with that cushion now gone, further losses in the portfolio come as a direct cost to the taxpayer. See the Fed report. Analysts at Barclays Capital on Thursday afternoon forecast that seasonality and elevated LIBOR would likely accelerate borrower delinquencies among some of the most at-risk mortgages; the analysts predicted that delinquencies could jump as much as 210 basis points for subprime mortgages in the 2007 vintage. In other words, look for losses on that Bear Stearns mortgage portfolio to grow. Disclosure: The author held no relevant positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.