JPMorgan Agrees To Buy Bear Stearns

Despite Deal, Asian Markets Falter In Response To U.S. Financial Insecurities

(CBS/AP)  JPMorgan Chase said Sunday it will acquire rival Bear Stearns in a deal valued at $236.2 million, a stunning collapse for one of the world's largest and most venerable investment banks.

JPMorgan Chase & Co. said the $2 a share, all-stock deal has received the required approvals from the federal government and the Federal Reserve. Bear Stearns shares close Friday at $30 a share.

The Fed will provide special financing to JPMorgan Chase for the deal, JPMorgan Chase said. The central bank has agreed to fund up to $30 billion of Bear Stearns' less liquid assets.

The two sides reportedly wanted to lock up a deal before investors could put pressure on both of their stocks once Asian markets were open for business.

At almost the same time as the deal for control of Bear Stearns was announced, the Federal Reserve said it approved a cut in its lending rate to banks to 3.25 percent from 3.50 percent and created another lending facility for big investment banks. The central bank's official meeting is on Tuesday. Before the emergency move to lower the discount rate, which is the rate at which banks lend each other money, the Fed was widely expected to again cut its headline rate by as much as a full point to 2 percent.

Federal Reserve Chairman Ben Bernanke says the central bank's latest actions "will provide financial institutions with greater assurance of access to funds."

The announcement from both the Fed and JPMorgan comes ahead of what some analysts expected to be a brutal day for global stocks. Asian stocks fell sharply after renewed worries about the U.S. financial system sent stocks tumbling on Wall Street.

In Tokyo, Japan's benchmark Nikkei stock index plunged early Monday more than 3 percent. In Seoul, the Korea Composite Stock Price Index fell more than 2.5 percent. Hong Kong's benchmark index tumbled over 4 percent in early trading and markets in Australia and New Zealand also fell.

A collapse of Bear Stearns could have created a further crisis of confidence in world financial markets amid a deepening credit crunch. JPMorgan's acquisition of Bear Stearns represents roughly 1 percent of what the investment bank was worth just 16 days ago.

The deal represented a 93.3 percent discount to Bear Stearns' market capitalization as of Friday, and roughly a 98.8 percent discount to its book value as of Feb. 29.

"The past week has been an incredibly difficult time for Bear Stearns," said Bear Stearns Chief Executive Alan Schwartz in a statement. "This represents the best outcome for all of our constituencies based upon the current circumstances."

[fuzzybear9]

Hello America

Now get this the Corporate Branch of Goverment
J.P. Morgan has recieved approval from the Corporate Lobbyist to use FICA funds to bail out Bear-Stearns.

It really is frightening when the Corporate Congress has to rely on the Other Branches of Goverment to Keep the economy afloat. or at least attempt it.

The only Investors that stand to lose are the stock holders of FICA holdings, no doubt they will lose all of their retirement nest eggs in the Buy Out.

Sincerely going to chop the heads off the Chickens Bear
Fuzzy

[puritan9]

When JP Morgan goes to the Feds to make up the loss from buying Bear & Stearns guess who gets stuck with the bill? The poor people end up bailing out the rich in America. That''s how the Republican economics works. Georgy boy has been successful 100%. Screw the American public again!

[nearl4511]

This was a purchase in the same way that an armed robber purchases the cash in a gas station register....except that it is legal.

[wardoglrs]

So the tax payers get robbed again. Dont forget to do your taxes. Same ole story and tactics differnt day and time. When we wake up to this robbing of the tax payer maybe just maybe we might get angry and really do something stupid like pay more taxes

[enriquecaliente]

This is a perfect example of Regan''s trickle down economy. An economy fueled by greed. Of course the CEO, his senior management team and the board of directors, have already feathered their nests and flown the coop. So much for Judo/Christian ethics.

[ypoons2]

Can''t blame Morgan Stanley for picking up something for a great price. However, I am more concerned about the possibility of the Chinese investment deal still going through. American financial institutions should not be influenced by communist institutions, whether or not China is a growing market. Possible Chinese investment should have been taken into consideration prior to our government attempting a bail out. Somewhere along the line the Chinese must be stopped from investing in American financial institutions.

[blogthis1]

Looks to me like the bear Sterns exec''s deserve another large bonus. they did a wonderful job this year.

[random_radar]

Bear Stearns CEO said everything was fine. The stock lost 99% of its value in 16 days. How about that?

[l8c6]

Those who own the government and the monetary system can''t go wrong. When profits are up, the bullying cries are for "free" unregulated markets and "privatization". When the going gets rough then the line changes to a nationalized concern that the citizens of the U.S. must carry the burden for thus bailout out these huge global monetary institutions. What a pyramid scheme the big monetary system players are running. The big players are anchored in global assets, the majority of humanity is anchored in fiat currency.

Sociopaths are scr*ewing it up again. It harkens back to a messed up Europe some 60 years ago.

[nothappyatall]

Look what happened as a result of this;

"Asian Markets Down After Bank Sold For $2 A Share; Dollar Hits New Low As Oil Prices Climb"

[nothappyatall]

JP Morgan''s founder, the namesake of the company is probably the most original crook of all, the man was involved in the banking schemes back in the 20''s and earlier which eventually calused the crash of ''29 and the creation of this Federal Reserve Bank, if you watch that segment in the zeitgeistmovie.com film (clips are also on youtube) you will learn how/why the US was taken off the gold standard on paper money, what caused the panic of 1907, why the FRB was created- WHO was involved, why, how the crash happened, how those 10% down stock schemes worked-WHO created the idea and how all of that is poised to repeat itself today.

AND with the same company involved in this massive takeover for 2 cents on the dollar Id be on the lookout for things to go downhill from here towards another depression type crash.
One parallel between then and now is WAR, there was WW1 which the country didnt want anything to do with but were forced into it, then WW2, then Vietnam which started on a false pretext- the bay of tonkin incident that now we learned never happened but which was used to get us into the war, now we are embroiled in Iraq & Afghanistan to the tune of $14 billion a MONTH, think about where the MONEY goes and who stands to rake in billions the longer it continues, then you can see why theres no urgent push to get out or remove troops.
Skumbag corps like morgan, enron, blackwater etc gain

[nothappyatall]

...but more and more services come out on Internet focusing on this kind of relationship, such as
DATING-SITE-SPAMMER-REPORTED-TO-CBS.com . how do you think of such a thing?

Posted by liu_justice"

Gee, I think you are a SPAMMER for your dating site that has virus'' that could damage PC user''s computers with spyware and adware if they go to it, therefor it is reported to CBS

[brianbwb-2009]

An article in the London Times last week quoted the CEO of Bear Stearns as saying that B.S. (how apropos the initials) had over 12 Billion as a liquidity cushion.

This was in response to speculation by the Brits that a major US bank was about to collapse, and the most likely candidate was Bear Stearns.

B.S. is selling B.S., and now JP Morgan is buying it.

All you stockholders of either stock had better have some KY jelly handy.

[incog-nito]

Nothing more than a blatant ripoff of BSC shareholders. Modern day robber barons.

[nothappyatall]

"An interesting factoid; Some dont but most very wealthy pay off their cards and pay no interst"

They probably have cards that are below 10% cause they DO have money and good scores.

"Many do not care about interest charged - they dont plan to have to pay it."

Bankruptcy is no longer a viable option for most people like it WAS, now you could be locked into repaying it over 5 years instead of all wiped out.

"Last year Chase, Citi, HSBC"

I HATE Household Bank Card, told them to shove their card a few years ago after they called me with sales offers at dinner time when I previously stated I wanted NO calls- ever.


"There is a big market for prepaid cards wit"

You must mean the pre-approved cards with the paltry $300 limit or requiring a deposit, and having annual fees etc that pretty much start you out with about 1/3 of the limit there.
I get the offers, I tear them up, I have ONE card, Washington Mutual/PayPal with a $6500 line, been good to me.

"How about a card with over $79 monthly maintenance fee?"

If I got one of those I''d laugh in their faces and send their application back in pieces in their pre-paid envelope

[nothappyatall]

I think you hit the nail on the head.
How does one "stay there".

Its much easier when you dont have a mortgage OR rent to deal with, I dont, but most people DO- they are the ones who are at the bottom of the titanic when their job goes away. Most people are one or two paychecks away from disaster, especially if their cards are maxed out! the same people are maybe 2 or 3 mortgage payments away from foreclosure- it snw balls- no job, no income, no mortgage payments, no house or telephone with which to accept calls for potential job interviews.

"Think about people who wanted the 0% intro interest rate credit cards to refinance their old card and live on."

Yes, and those cards will be harder to get now, and you cant keep robbing peter to pay paul- if you pay the minimum payments this is bad for your FICO credit score too- you must pay MORE than the minimum, if only $10. My statement on line shows a default graph of how many payments are minimum, over the minimum, late, no payment due etc My FICO score is near 800- I NEVER pay just the minimum.

[gce65]

Nothing says RUN ON THE BANKS like a $2 per share buyout (that was worth what, about $160 six weeks ago?)...except that it was done in emergency around-the-clock meetings over the weekend by people at the highest levels of banking and govt finance.

I SMELL FEAR! I SMELL A MONDAY MORNING RUN ON BANKS!

[Latrocinor]

"These are NOT pre-paid cards."

I meant to write

"These are not the pre-pay deposits."

Duh!

[Latrocinor]

See, Im smarter than that, I made SURE my mortgage was fixed rate with NO penalty for prepayment, then I paid it off in 6 years with double payments- the extra put on the prin. THAT my friend is how you buy a HOUSE and more importantly- how you STAY there thru think or thin.
-------------
I think you hit the nail on the head.

How does one "stay there".

Think about people who wanted the 0% intro interest rate credit cards to refinance their old card and live on.

An interesting factoid; Some don''t but most very wealthy pay off their cards and pay no interst.

Many do not care about interest charged - they don''t plan to have to pay it.

Last year Chase, Citi, HSBC and other card issuers voided account terms that existed for decades and raised the card interest rates, some to default rates.

Also some cards were outright canceled and applications mailed to the owners so they could reapply for new cards with not very kind terms and conditions.

There is a big market for prepaid cards with big establishment fees that, in some cases, exceed the card amount. These are NOT pre-paid cards.

Imagine a person getting a $250 dollar Visa or Master Card and paying $250.00 in account opening fees.

How about a card with over $79 monthly maintenance fee?

The the little guy is guilty too.

[nothappyatall]

I apologize, I did read into it. Good call.
Posted by bhoogren"

APology accepted bhoogren, thanks