JPMorgan Agrees To Buy Bear Stearns

(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"