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In another sign of the worsening American credit crisis, JP Morgan Chase agreed to buy out insolvent investment firm Bear Stearns for approximately $267 million.
Bear Stearns, which was valued at $3.54 billion at close of trading on Friday and almost $16 billion as recently as last year, was damaged fatally by a liquidity crisis evidently brought on by investments in mortgage securities.
As part of the deal, Chase will also get possession of Bear Stearns’ New York headquarters, which is valued at over $1 billion.
In addition, the Federal Reserve has agreed to take $30 billion of Bear Stearns investments on in a massive federal bailout of the firm.
According to an article by Charles S. Morris in the Washington Independent, the Fed took on the debt because “Bear is at the center of a web of other funds that look a lot like Bear – heavily leveraged and holding lots of mortgage-backed paper. If the Fed didn’t act, a lot of them, perhaps most of them, would also fail.”
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2 Comments »
Comment posted March 18, 2008 @ 1:01 am
…and the other story…but don’t ‘bank’ on it. Allegedly, an official on condition of anonymity claims that while Bush has been on his own - with handler Cheney and McCain (Bush’s surrogate-hopeful) in Iraq and one could say, essentially detained under tight security by our military – George himself has offered an alternative suggestion…
“Tell the Feds to save the 30 billion. Just wrap Wall Street in plastic and duck tape.”
I say, go for it George.
Comment posted March 17, 2008 @ 8:01 pm
…and the other story…but don't 'bank' on it. Allegedly, an official on condition of anonymity claims that while Bush has been on his own - with handler Cheney and McCain (Bush's surrogate-hopeful) in Iraq and one could say, essentially detained under tight security by our military – George himself has offered an alternative suggestion…
“Tell the Feds to save the 30 billion. Just wrap Wall Street in plastic and duck tape.”
I say, go for it George.
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