Further, it quotes Eric Salzman as saying: "the Fed, who maintained that they only became aware of Bear Stearns dire liquidity situation Thursday night, March 13."
The Fed did not say that they were unaware of Bear's difficulties before March 13 - just that they did not have full details of the extent of the crisis until the 13th - likely true. Bear's competitors probably raised their concerns at the lunch meeting, but Bear's competitors could not speak with perfect knowledge of Bear's books.
There is a difference between not buying securities from a firm and not selling credit default swaps on a firm.
The author is trying to portray the refusal to sell third-party swaps on Bear as a refusal to do business with Bear.
Either the author has no clue what a credit default swap is, or he is intentionally misleading his readers.
Hey Wideawake,
You make it sound like just an ordinary day on Wall Street. Three things completely destroy your scenario:
1. If everything was peachy dandy, why was EVERYBODY at this meeting EXCEPT Bears Stearns?
2. If everything was peachy dandy between Bear Stearns and
the rest of the street, how did Bear get into a liquidity crisis? Somebody stopped providing them with funds.
Why did the Fed AFTER forcing the Bear sale to JPM then open up their resources to other investment banks? If they openned those resources to Bear, Bear wouldn’t have had to sellout.